Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro’s First Quarter 2021 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Juan Ignacio Galleano, Investor Relations Manager. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during company’s presentation. After the company’s remarks are completed, there will be a question-and-answer session. [Operator Instructions] 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’ll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning. And thank you for joining Adecoagro’s 2021 first quarter results conference. As you may have seen in our release, we continue delivering strong operational and financial results. Adjusted EBITDA marked a new record high for the first three months of the year and an increase of almost 80% compared to last year. The results achieved prove the success of the investments we did that are driving our EBITDA and cash generation as we project it. During the past five years, we have invested approximately $400 million across all our businesses in projects that are generating returns on invested capital of over 25%. These investments have improved the efficiency and sustainability of our operations, enhanced our competitive advantages, and allowed us to be better position to face all different scenarios. Just as important as reconciliation of our investment is a commitment of our team, our focus on efficiencies and our strategy of being local producers. It was thanks to this that in 2020 we achieved solid results despite the challenging environment and it is also the reason why we are now able to benefit from the improved price scenario and generate higher results. Moving on to the performance of our businesses. In our Sugar, Ethanol and Energy business, one of our competitive advantages is the fact that we operate under a continuous harvest model. This means we can crash sugarcane non-stop year round, even during the first quarter, which is a traditional inter-harvest period. Actually, we crushed a record high for the first three months of the year. It allows us to dilute fixed costs and capture good Sugar and Ethanol prices. Achieving this crushing volume was possible, thanks to the investment we need to expand our sugarcane plantation, increase the capacity of our mills and enhance efficiencies at…

Thank you, Mariano. Good morning, everyone. Now let’s move to page four, with a brief analysis on the Rains in Mato Grosso do Sul. As seen on the top charts, rains in our cluster Mato Grosso do Sul during the three-month period of 2021 were 60.8% higher than during the same period of last year and 20.2% higher than the 10-year average. Precipitations were registered throughout the quarter but were especially concentrated in January, but the registered rains doubling the 10-year average level. As can be seen in the bottom-left chart, the frequency and distribution of rainfall caused interruptions in our crushing activities, leading to a 10.1% decrease in milling per day. However, this was fully offset by an early start of million activities in our cluster, which resulted in an 87% increase in total milling days and 76.1% increase in effective milling days. We were able to achieve these higher results because our teams were readily available to restart crushing activities and because, as opposed to the first quarter of 2020, we had good cane availability thanks to our strategic decision to reduce our milling pace during last year. As a result of this, crushing volume reached 2.1 million tonnes of sugarcane during the first quarter of 2021, 58.3% or 800,000 tonnes higher compared to the same period of last year. Please jump now to page five, where I would like to walk you through our agricultural productivity. During the quarter, sugarcane yields reached 75 tonnes per hectare, while TRS content reached 112 kilograms per tonne, marking a 15.4% and 14.3% increase, respectively, compared to the same period of last year. The combination of these two effects resulted in our TRS production per hectare of 8.4 tonnes, 31.9% higher year-over-year. The year-over-year gap is explained by the strategy we…

Thank you. [Operator Instructions] Today’s first question comes from Thiago Duarte with BTG Pactual. Please go ahead.

Hello. Good morning, Mariano. Good morning, Charlie. Thanks for the call. I have three questions. I’ll try to brief -- to be brief. I’ll start with the Sugar and Ethanol and Energy segment. As you mentioned in your opening remarks, I know there’s been growing concerns on the poor rainfall levels that affected, that shouldn’t be affecting cane yields across the Brazilian Center-South. You already mentioned that core clusters weren’t as affected, which is great. So I wanted to hear your views on how you think that it will affect Sugar production in the Center-South of Brazil, Sugar and Ethanol production in the Center-South of Brazil in general in this ongoing crop. The reason why I’m asking this is because I suspect that the industry will continue to maximize Sugar output so that Ethanol output will be the one sacrifice by lower feedstock availability. So I wanted to hear your views and how we should expect Adecoagro [ph] to react to this scenario in terms of production mix? The second question is related to capital allocation. So based on the current environment, it looks like you’re headed to a very good free cash flow generation this year, coming from better commodity prices and the phasing out of your five-year investment plan. So can you please remind us what’s the ideal or the target leverage ratio that you are aiming and whether you should be able to come out with a stronger dividend cash distribution policy beyond the share buybacks that you have been executing or if you see room for another round of capacity expansion and attractive investment opportunities across your business unit? So just how we should see capital allocation between dividends and cash distribution and investments? And finally, my third question is on the Rice business, you have been showing a very good progress in this quarter in particular, a very good contribution from the Rice business in terms of yields and in terms of prices as well. So can you comment a little bit on the outlook and the sustainability of those margins, in particular in terms of how you see the pricing outlook going forward? Thank you so much.

Thank you, Thiago, very much for your questions. And I want to take first -- your first question on the Sugar and Ethanol outlook for this year in general and our strategy there and how is the climate affecting and I will ask a Renato to give more color on this. So, Renato, can you answer Thiago.

Hi, Thiago. Thank you for the question. I think it’s becoming clear that the weather in the Center-South Brazil, but which will have less TRS than everyone was imagined. I think most analysts are saying a drop in about 10% of the TRS produced. So it’s -- I think it’s becoming clear that Brazil has not enough TRS to supply the 36 million tonnes that the world needs from Brazil and also to supply the recovering Ethanol market, that it’s increasingly -- that should be increasing approximately 6% this year, 6% in Ethanol market is equivalent of 2.7 million tonnes of sugar equivalent. So different from the last two years, we think that the twp products, Sugar, Ethanol, will be trading close to the tariffs. So last year we saw Sugar paying much more than Ethanol. So there are a lot of switch from Ethanol to Sugar, I think, almost 11 million tonnes and the year before it was exactly the opposite. This year we think that we will be seen a healthy competition to the same TRS from Sugar and Ethanol. So that’s why we see that both products will be -- will have a good prices. Our strategy in this scenario is to be as flexible as possible to turn or to change the needs in a weekly basis, as Mariano mentioned before, taking advantage of the product that is more profitable at that particular moment. Just as a reference, today hydrous is in multiples of sugar equivalent to $0.19 per pound and then hydrous $0.20 per pound. So now we are maximizing Ethanol.

Clear, Renato. Thiago, anything else on the Sugar and Ethanol? Is that okay?

Oh! That’s okay. That’s okay.

Okay. Okay.

My follow-up would be the -- how we thinks the mix in the Center-South of Brazil will behave, won’t you believes the two products are going to be trading at parity, whether -- because the consensus was there’s going to -- there was going to be a maximization of Sugar -- maximization of Sugar output and whether you thinks there’s going to be more TRS diverted to Ethanol. Not from the Adecoagro, which is clear the strategy, but from the whole industry or the industry in general.

I didn’t understand your question, Thiago. As we mentioned before, we think that the parity will be similar even in the Center-South, not as much of those in southern part a little bit different, but closer than the last two years, but since the most players in Center-South is very advanced in their hedging. I think they are maximizing Sugar at least when the parts are very close as we are today. So we think that they are most projections and we believe that they are correct. The Center-South will try to produce the 36 million tonnes that everyone is expecting from Brazil.

Okay. Thank you, Renato.

Thank you, Renato.

Just to complement, Thiago. This is why our strategy has to continue to be open on the Sugar price, that’s in general or compared to the rest. Then I will go to the second and third question that you asked. On the third question that is the Rice operation. Thank you for that question and it’s an opportunity to point out again, the amazing job that the full team of the Rice operation has done. This is something we’ve been pursuing for several years. This has been very specific investment that has been done in planters, for example, we change the whole strategy of how to plan. That means 45,000 hectares as we’re planted at a very efficient rate and this is something that we can continue to sustain. Then on the whole irrigation system that is a very dedicated. There is a lot of technology being applied here. We have a technology applied on every place where Internet of Things are connecting, all the different flows of water to move, this makes us not only more efficient in terms of economic, furthermore more sustainable also. So all this operation is improving every year and we expect to continue to go through because this is a continuous improvement that is going on there, people is learning more, the team is more solid, the team knows more on how to execute it. So all these investments that we did are very relevant, but the most relevant thing is how the team is working to make all these things come up together. Then, on the commercial part or the logistic part, this is a huge logistic challenge. There are three different mills, a five to eight different farms or places where we are harvesting. So all that movement, the quality of rice,…

Mariano, thank you so much for your detailed answers. Very helpful. Thank you.

And our next question today comes from Lucas Ferreira with JP Morgan. Please go ahead.

Can you hear me?

Yes. Perfectly well.

Okay. Sorry. Hi, guys. My questions are somehow follow ups for Thiago questions. The first one if you can briefly talk about the CapEx itself. So with the company generating more cash, I assume you guys have, probably, some projects in the pipeline, maybe efficiency projects. So how big the CapEx can be this year, next year, I’m talking about the expansion CapEx and if you can give us a color? And the second question, more specifically, guys about the free cash flow to be generated in Argentina. So not -- I don’t want you guys to make any projections here, any forecasts or guidance, but looking at the EBITDA you guys generated in Argentina in the first quarter i.e. in the bio asset formation, you should have a very strong year in Argentina. And I suppose that if the markets don’t change much, also a very good 2022. So if not mistaken, you still have over $150 million to $200 million in debt in Argentina. So but given that this business consumes very low CapEx, you should be generating a lot of cash in Argentina in next couple of years. So beyond paying the debts, what can be done? So when are you guys planning to be fully that debt? So what will be done in the future with the cash generation and more specifically generating in Argentina? Yeah. So these are my two questions. Thank you.

Thank you, Lucas for your question. First of all, in terms of the overall CapEx that you were asking, a -- we expect CapEx to continue to be in line with what you’ve seen a last year. We don’t see significant changes there. All these projects are projects that have growing above 25% that we’ve been mentioning what we achieved. So what we are continue to do is more or less within the same things. We continue to see very specific small project in each one of the businesses that we are undertaking. So we -- in general, what we’ve had happen till now is in line with what you’ve seen in 2020. So for now, you should continue to expect in that line. Then moving to the part of Argentina, we always think about Argentina and Uruguay altogether, so the business is being generated in the two countries at the same time. And yes, we are generating good returns. We are also having a interesting small CapEx is, as I mentioned, in the case of rice and you can see the same thing in the case of a sunflower or in the case of peanuts on the overall crops and also in the Dairy business. So they are already things that are growing there and as we continue to invest a more or less in line with what we’ve been doing in Sugar and Ethanol business. So Argentina and Brazil are similar in terms of the amount of money that is generating. And in terms of debt, we think on the debt as the whole company. So sometimes we have intercompany debt in order to be more efficient, but that’s only the case. In general, you have to analyze our total depth that we are very much in line with where we want it to be.

Thank you.

And our next question today comes from Guilherme Palhares with Bank of America. Please go ahead.

Good morning, everyone. Thank you for taking my questions. Questions from our side first reading in terms of the good costs of the agricultural business, so we see that fertilizers costs probably are rallying right now. So if you could share some other thoughts for the next season as well in terms of cost that you expect per hector? And the second question on the Sugar and Ethanol business is looking at the productivity gains that the company achieved this first quarter, what you could expect for the remaining of the season as the company is pursuing a greater capacity utilization? If you could talk about the yields that you are expecting and it is better you should actually persist for the season. That will be two questions. Thank you.

Hi, Guilherme. Thank you. I would take the cost part of the agriculture and general, and then your -- and then Renato will talk in more details about what we can expect on our Sugar and Ethanol yields and milling capacity. In terms of costs, as you mentioned, the cost of fertilizers are increasing and the cost of transportation with increasing cost of oil is also increasing. And there are some costs are as all the different things that we sell are increasing in a relevant number. There are costs that are increasing. Part of that is being offset by the improvements that we are having in every single line of our operations. But the overall cost can continue to increase. But as you see that the -- our sales are improving the price by way more than that, our margins in general are improving, but we can expect an increase in of the overall cost of the agriculture in general. That is one point. And then on the Sugar and Ethanol, I will ask Renato to go more in detail on what could be our expected yield for the rest of the year and our million in the overall.

Okay. So as it mentioned, much growth this year has a different weather pattern than the other regions in the Center-South. So we had good rains in the second semester of last year. Actually we had the 200 millimeters Argos. Even in general January of this year, we have 200 millimeters. So the cane outlook for the first quarter was very good. That’s why we have the crushing records in the first quarter. The weather became drier in March after the last rain that we had was in the beginning of March. So if the weather persist dry now, we expect that we are going to have a huge redaction that will be partially offset by the TRS content in the sugarcane. Today the TRS is 4% higher than we forecasted. In our mill in Alegre, I think the weather is more similar to the other regions in the Center-South. Remember that our view is approximately 200 kilometers from the operator. So it’s suffering more with the lack of rains. So we expect to have a huge reduction between 5% and 10%. If you put out those variable together, higher TRS and lower yields, we will be probably processing 5% to 10% more TRS than we did last year.

Okay. Perfect. Thank you.

[Operator Instructions] And ladies and gentlemen, this concludes the question-and-answer session. At this time, I’d like to turn the floor back to Mr. Bosch for any closing remarks.

Before closing the call, I want to thank you all for joining the conference. The market outlook of the products that we produce is looking promising and we are in an unbeatable position to take advantage of such favorable scenario. But again, this is only possible because of the strategic investments we made across our operations during the last couple of years. And we believe we are in an excellent position to generate good financial results that we are already distributing to our shareholders throughout our buyback program and we plan to continue doing so in a more structural way during the coming years. Last, I would like to reiterate my gratitude to all our operating teams that are doing an outstanding job and to our shareholders for their continuous support. So thank you and see you in our upcoming events.

Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.