Good morning, ladies and gentlemen. And thank you for waiting. At this time, we would like to welcome everyone to Adecoagro’s Second Quarter 2022 Results Conference Call. Today with us we have Mr. Mariano Bosch, CEO, and Mr. Charlie Boero Hughes, CFO. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the Company’s presentation. After the Company’s remarks are completed, there will be a question-and-answer section. At this time, further instructions will be given. [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 will turn the call over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning and thank you for joining at Adecoagro of 2022 second quarter results conference. Before going into the results of the quarter, a brief update on our distribution policy. As you know, we have committed to distribute via a dividend and buyback and minimum of 40% of the net cash flow from operations generated in the previous year. In May, 2022, we marked the milestone for Adecoagro as it was the first time in our history that we made a cash dividend payment. We paid out the first installment of $17.5 million, and in November of this year, we will pay the second installment. As announced, this will amount to a cash dividend distribution of $35 million, approximately $0.32 per share. At the same time, we continue buying shares under our buyback program and during the first seven-months of the year. We repurchased 2.7 million shares totaling more than $20 million. Now going into the highlights of the operations, I would like to start with a sugar ethanol and energy business. During the quarter, adjusted EBITDA went up by 42% year-over-year, despite an increasing costs. And this was tanks to our commercial strategy, which enabled us to sell most of our production at the peak of prices. Two clear examples of this. One, we started the quarter with our tanks full of ethanol, and in April when Ethan prices hit levels, 35% higher than sugar, we ended our tanks and even sold our day-to-day ethanol production. Second, in June, when domestic ethanol prices dropped, we exported part of our anhydrous ethanol to Europe, and achieved an average premium of 15%. Exports are a possible outlet for our production, because we have the necessary certifications and the industrial capacity to reach the alcoholic content required in Europe. It was because…

Thank you, Mariano. Good morning, everyone. Let’s start on page four with a brief analysis on the Mato Grosso do Sul. As seen on the top tables, rainfall cluster during the second quarter of 2022 were 103.4% higher and during the same period of last year and 3% higher than the 10-year average. After a dry start of the year, receiving above average rainfall during March and April allowed our short implantation to continue to recover from the impact of 2021 first event. Better cane availability in turn, enabled us to increase our crushing pace and continue to take advantage of the constructive price scenario. Let’s move ahead to Slide 5, where I would like to discuss our sugarcane crushing. During the second quarter, our crushing volume amounted to 3.3 million tons of sugarcane only 5% lower than last year. Thanks to our 27.3% increase in harvested area, which allowed us to compensate for lower productivity indicators as we will see next. On a year-to-date basis, crushing volume reach 3.6 million tons 35.7% lower compared to the same period of last year. This was fully explained by the dynamics of the first quarter, namely the late start of crushing activities as expected, and the fact that harvesting activities were mostly concentrated on reform areas with limited growth potential. Nevertheless, we expect it to make up for the slow starting the following quarters and reach a crushing volume in line with last year. For instance, we accelerated our crushing pace and in July 2022, we marked a new monthly record of 1.5 million tons crushed in our cluster. Please turn to Page 6, where I would like to walk you through our agricultural productivity. As we are expecting, sugarcane yields during the quarter were 24.5% lower compared to the same period…

Thank you. [Operator Instructions] Our first question is from Isabella Simona with Bank of America. Please go ahead.

Good morning, everyone. Guilherme from Bank of America. Two questions from our side in terms of the sugar and ethanol business. First congratulations on the commercial execution in this first half. But looking for if you could just share your thoughts in terms of the mix that you expect to crush in terms of ethanol and sugar and just in terms of the commercial strategy, when you look in terms of hedges for this season and the next one, what is your strategy there? We saw marginal improvement in terms of the volumes hedged off sugar and if you could share your thoughts going forward, please. Thank you.

Hi, Guilherme thank you very much for your question. We also have in the website, another question from Eduardo Monez related to the same point, and the question is related to the tax reduction in Brazil, what are the impacts to your strategy for the rest of 2022 and is hydro production preferable are hydro prices sustainable. How do you see the trend for the ethanol exports and better sugarcane production for second half? And this price dropping can expect strong EBITDA growth margin expansion on the year-on-year. So I think, your question plus, this question in the website will be answered by Renato that can give more color on this. Renato.

Okay. Thank you for the question. So we start with sugar will remain very positive with the sugar outlook. We think that the drop of price a couple of weeks ago was a technical movement, nothing related to the fundamentals of the sugar. Actually, we are positive with the SMB scenario. If you take the supply side of the equation, we think that the centers of TRS production is going to be in line with last year, a little bit more crushing and a little bit less TRS per ton. The mix, I think we think the mix is going to be increase a little bit towards sugar approximately 1% which represent approximately one million tons of sugar is not a big change because the news were already maximizing sugar before the tax change. And also because in the third quarter is more difficult to have flexibility to produce to have more flexibility because the TRS counting is very high. The sugarcane is rich and meals are trying to crush as much as possible. Also the European crop is having some issues. So we expect a lower crop from Europe. So I think there are a lot of points in the supply side, going to the demand side the lower price increase the demand for sugar from the destination. We think that a good indication of debt is a strong cash premium and a strong line. And here just a point regarding Adecoagro, since we have not had our total position, we have hedge now 63% of our 2022 production at $19.58 per pound. We are being able to capture the spot market premium, approximately 2% this cash premium that I was just mentioned. Also that the market is predicting a adapt sugar death in the Q3 and Q4, which…

Thank you, Renato.

Thank you. The next question is from Lucas Federa with JPMorgan. Please go ahead.

Okay. Thank you. So I have two questions. The first one may also to Renato about the quality of the sugarcane and the damage that was caused by the last year event. So my question is Renato, if we have like a normal rain season during the summer, so how will be the quality of your sugarcane next year for the next season so how fast can crushing recover if you have no weather issues during the summer? And the second question to Mariana and Charlie. So if you can talk about the outlook for the following season in the farming and rice businesses regarding your expectations on weather and also costs. So if you can comment on how that especially the fertilizer line impacted you this season and how regarding considering your purchases, how should we think about this fertilizer line going forward? Thank you.

Thank you Lucas for your question. And Renato, do you want to comment on -.

Hi Lucas, as I was mentioning, the sugarcane is looking very good. All the sugarcane that we are harvesting now, they are regrowing. And this [indiscernible] crop that we call is looking very, very good. The fact that the year that we didn’t have much rains in key periods were very good because we didn’t have damage during the harvesters operation. So we are very optimist about the sugarcane for next year. We didn’t have any frost this year. So we have basically finished the wind that we have frost in businesses. So no frost this year. So we are very optimistic about next year. So we expect to increase our crushing in at least 10% compared to this year. I think next year is going to be a transition year because we are recovering from a lot of weather bad events. So is a year of recovery and probably we will reach our full capacity, get very close to our full capacity, not next year, but in the following months.

Very clear Renato. Thank you. Lucas, regarding the outlook for the following season, we are very well positioned today in rice and crops for next season. We are starting the planting season, the amount of water we have already in the reservoirs for the rice operations are very good and enough to have a very an excellent season. And regarding the crops, all the fields are ready to start the plantation. We have all the necessary inputs we have acquired more and that is why you see more inputs and more working capital for this season in order to be well prepared for the planting season, where that is what will be reflected in 2023 numbers. So just to give you a little bit more color, the campaigns are shown in the following year. So the campaign 2021 is what we reflected in the numbers of 2021 - on the 2021 year, that for rice and crops was an excellent year. That excellent year of 2021 has to do with very low cost at the planting time and all the price increase in 2021. So that was an exceptional year 2021, when we analyze all the history of our research in crops and rice. Then when we go to the following year that is the current year, we are having not good results, not that good result because we have a small increase in prices, 10% to 15% increase in prices and almost a 40% increase in the price of mainly freight, fertilizers and chemicals. So all that, increasing prices is being reflected in the current campaign that we just finished that is reflected in this current year 2022. So for next year 2023, that is what we are starting to plant. Right now is where we think we are…

Perfect. Just one quick clarification. So the fertilizers you are going to be using in the 2023 crop season with the one you are starting to plan now. So how much that increased over 2022, just so we have an idea?

The main impact is 2022. The impact we increased, so the numbers we are reflecting today increased 40%. Now from that 40% to today is almost flat.

Okay perfect. That is what I wanted. Thank you very much.

Yes.

[Operator Instructions] The next question is from Henrique Brustolin with BTG. Please go ahead.

Hi, good morning everybody. One question on my side, on the sugar and ethanol business as well. I just wanted to hear from you when we look forward, how much -- how do you see the current environment to continue expanding the sugarcane fields you have in your current cluster? And when you think about your installed capacity to fill that up, how much do you believe improved yields should help that and how much should come from a bigger area expansion? So that is my question on the sugar and ethanol side.

Okay. Thank you very much. And for your question, Renato, do you want to comment, and then I can compliment.

Yes. Thank you for the question. Our current area of sugarcane is almost enough to supply our industrial capacity. Our industrial capacity in the cluster in Mato Grosso do Sul is around 12.5 million tons. And in [Montreal] (Ph) 1.2 and we have an are almost enough to supply all the cane that we need. But of course we depend on the use that we are discussing. So if you have a yield between 85 and 90 tons per hectare, we are fine, but we are still planting new areas. Because, we think that we always can crush a little bit more than that in the industry. We always can remove some bottlenecks and crush a little bit more, and we have a lot of farms in our cluster in Mato Grosso do Sul that are very strategic, very close to our mills so we can reduce the average distance of our sugarcane fields. So take into consideration, as I said before, next year is a transition year. So we should be crushing in Mato Grosso do Sul close to 11 million tons of sugar cane. I would say one million tons more than this year, and probably reach something between 12 and 12.5 on the following year. And Mariano, if you want to compliment.

Yes. Clear the 20.5 is only in Mato Grosso do Sul. So in the 1.2 of - reach the 13.7 that we always talk as a total amount that we will be crashing, just that clarification. And on top of that, I would add to your question that you have seen all over Brazil, sugarcane area being reduced, and in this specific area of Mato Grosso do Sul because of the particular competitive advantage of the sugarcane over the soy and corn it has been a different case. So we have been continuing to increase our sugarcane area comparing to these areas, because it is more competitive because of this combination we always talk about the soy and climate and what is more profitable to do in that specific areas. That is why we are so optimistic to complete our crushing capacity. And on top of that, as Renato was saying we can go even further when we think in the long term project of the organic growth of this area that can continue to improve.

That is very clear. Thanks very much.

This concludes the question and answer session, at this time I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you everyone for participating in the call and hope to see you in our next events.

Thank you. This concludes today’s presentation. You may disconnect your line at this time and have a nice day.