Adecoagro reported 2Q17 Adjusted EBITDA of $67.2 million, 31.3% higher year-over-year

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Aug 15, 2017, 17:20 ET

LUXEMBOURG, Aug. 15, 2017 /PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO, Bloomberg: AGRO US, Reuters: AGRO.K), a leading agricultural company in South America, announced today its results for the second quarter of 2017.

Main highlights for the period:

Adecoagro reported Adjusted EBITDA of $67.2 million in 2Q17 and $111.9 million for 6M17, 31.3% and 18.6% higher year-over-year, respectively
Gross sales in 2Q17 reached $228.5 million, 35.0% higher year-over-year
Net income in 2Q17 stands at $3.8 million, $21.6 million higher than 2Q16

Financial & Operational Highlights

Adjusted EBITDA for our Farming and Land Transformation businesses' in 2Q17 was $11.0 million, 116.5% higher than in 2Q16. The increase is primarily explained by a $22.9 million increase in gains derived from the mark-to-market effect of our commodity hedge position. This gain was partially offset by a $17.6 million decrease in margins, particularly from our Crops segment, resulting from (i) lower soybean and corn prices; and (ii) higher production costs measured in USD as a result of the real appreciation of the Argentine peso.
Year-to-date, Adjusted EBITDA reached $30.6 million compared to $31.3 million the same period last year. Higher productivity across our Crops, Rice and Dairy operations was offset by lower soybean and corn prices and the impact of the real appreciation of the Argentine peso.

In our Sugar, Ethanol & Energy business, Adjusted EBITDA in 2Q17 reached $61.4 million, marking a 21.2% increase compared to 2Q16. The main factors which contributed strong financial performance during the quarter were: (i) an increase in sugar and ethanol selling volumes, 22.5% and 53.5% higher year-over-year, respectively; (ii) an increase in sugar, ethanol and energy realized selling prices, respectively 14.6%,16.5% and 49.2%; and (iii) a $21.0 million gain generated from the mark-to-market effect of our sugar hedge position, compared to a $13.2 million loss recognized during 2Q16. This increase in financial performance was achieved despite (i) an 8.6% decrease in sugarcane crushing as a result of above average rainfalls during April and May; (ii) the appreciation of the Brazilian Reais (BRL) which resulted in higher productions costs measured in USD; and (iii) a $7.3 million non-cash loss generated from the mark-to-market valuation of our unharvested sugarcane plantation, compared to a $21.4 million gain in 2Q16.
On a cumulative basis, Adjusted EBITDA for 6M17 grew by 26.0% reaching $91.6 million. Main drivers and offsetting factors are in line with those explained for the quarter. Adjusted EBITDA margin reached 39.2%, while Adjusted EBITDA margin net of third party commercialization was 46.1%, compared to 55.2% from 6M16. Lower margins are mainly explained by an increase in production costs as a result of the appreciation of the BRL coupled with a decrease in total TRS produced.
Net Income in 2Q17 was $3.8 million, compared to a loss of $17.8 million in 2Q16. This increase is explained by (i) a $16.0 million increase in Adjusted EBITDA; and (ii) lower financial losses ($22.9 million compared to $38.3 million in 2Q16). These results were partially offset by a $10.2 milllion increase in depreciation expense, mainly explained by the expansion of our sugarcane plantantion.

Strategy Execution

Sugar, Ethanol & Energy Expansion Update

Phase I: The industrial expansion of the Angelica mill was completed during June 2017. We have installed larger mill rollers which have allowed us to increase sugarcane crushing per hour by 150 tons/hr or 17%. Annual nominal crushing capacity has increased 0.9 million tons per year to a total of 5.7 million tons.
Phase II: We have begun building the foundations to add a new cane crusher to the Ivinhema mill. Construction is progressing well and on schedule. Once completed, we will proceed with the expansion of the juice treatment and sugar factory. These investments will allow us to increase crushing capacity by 400 tons/hour or 2.1 million tons per year. Ivinhema is expected to reach a total capacity of 7.3 million

The expansion of our sugarcane plantation to supply the new capacity is also advancing well. As of the end of July 2017, we have leased 19.3 thousand hectares of which 6.4 thousand have already been planted. We expect sugarcane planting to grow at a pace which will allow total milling to increase by approximately 0.5 million tons per year, reaching a total of 14.2 million tons by 2023 (13.0 million in the Cluster and 1.2 million at UMA mill).

Share Repurchase Program

Over the last 12-months and as of the date of this report, Adecoagro has repurchased a total of 1.5 million shares or 1.2% of outstanding shares for a total dollar amount of $15.1 million. Since the inception of the program in August 2013, Adecoagro has repurchased an aggregate of 3.8 million shares equivalent to 3.1% of outstanding shares or $33.4 million.

On August 11, 2017, the Board of Directors approved the extension of the Company's share repurchase program for an additional twelve-month period ending on September 23, 2018. Under the buyback program, the Company can acquire shares up to 5% of the outstanding share capital or 6.1 million shares.

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Adjusted EBITDA is defined as consolidated profit from operations before financing and taxation, depreciation, amortization plus the gains or losses from disposals of non-controlling interests in subsidiaries. Adjusted EBIT is defined as consolidated profit from operations before financing and taxation, plus the gains or losses from disposals of non-controlling interests in subsidiaries. Adjusted EBITDA margin and Adjusted EBIT margin are calculated as a percentage of net sales.

Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 22 of our 2Q17 Earnings Release found on Adecoagro's website (ir.adecoagro.com)

Forward-Looking Statements: This press release contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as "anticipate," "forecast", "believe," "continue," "estimate," "expect," "intend," "is/are likely to," "may," "plan," "should," "would," or other similar expressions.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this press release might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

To read the full 2Q17 earnings release, please access ir.adecoagro.com. A conference call to discuss 2Q17 results will be held on August 16, 2017 with a live webcast through the internet:

Conference Call

August 16, 2017
11 a.m. (US EST)
12 p.m. Buenos Aires
12 p.m. Sao Paulo
5 p.m. Luxembourg

Participants calling from the US: Tel: +1 (844) 836-8746
Participants calling from other countries: Tel: +1 (412) 317-2501
Access Code: Adecoagro

Conference Call Replay
Participants calling from the US: Tel: +1 (877) 344-7529
Participants calling from other countries: Tel: +1 (412) 317-0088
Access Code: 10108574

Investor Relations Department
Charlie Boero Hughes
CFO

Hernan Walker
IRO
Email: [email protected]
Tel: +54 (11) 4836-8651

About Adecoagro:
Adecoagro is a leading agricultural company in South America. Adecoagro owns over 247 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 1.9 million tons of agricultural products including sugar, ethanol, bio-electricity, milled rice, corn, wheat, soybean and dairy products, among others.

SOURCE Adecoagro S.A.