Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Fourth Quarter 2022 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; and Mr. Renato Junqueira Pereira, Sugar, Ethanol & Energy VP; and Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in 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. Before proceeding, let me mention that forward-looking statements are based on beliefs and assumptions of Adecoagro's management and all 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 2022 fourth quarter results conference. 2022 was a challenging year for the company. We faced cost pressure in all our segments, and weather challenges in Argentina and Uruguay, where our farming operation is based. However, despite such unfavorable conditions, we delivered strong financial results and generated adjusted EBITDA in line with 2021. This was possibly thanks to our focus on efficiency, our operational flexibility and our very well-executed commercial strategy that allowed us to profit from opportunities in the domestic and export markets. A clear example of this is that we captured record prices of over $0.26 per pound in sugar equivalent in more than 20% of our ethanol sales. Since we started our growth plan, our goal was to generate positive cash flows and share results with our shareholders. I'm happy that we achieved what we proposed and are now in that situation. 2022 was the first year of our formal distribution policy, but the second consecutive year where we distributed more than 40% of the cash generated, while keeping our debt levels below 2x EBITDA. We paid out $35 million in cash dividend, which equals $0.32 per share approx. In addition, we invested $37 million in our buyback program, repurchasing more than 4% of the equity of the company. Between dividends and buyback, we distributed 47% of the net cash from operations generated in 2021, exceeding the 40% minimum established in our policy. This equals a distribution yield of more than 7%. Now, based on the results we are presenting today, during 2023, we will distribute a minimum of $57 million, of which $35 million will again be via cash dividends and the balance via buyback. Now, some words regarding the outlook for 2023. Here, I want to separate two…

Thank you, Mariano. Good morning, everyone. Let's start on Page 5 with a brief note on the rains in Mato Grosso do Sul. As you can see on the chart, during 2022, rains in our cluster presented a 9% increase compared to last year. Good precipitation levels throughout the year favored the development of our sugarcane plantation and improved its productivity outlook as we will see in the next slides. Let's move ahead to Slide 6, where we would like to describe our sugarcane crushing. In the last quarter of 2022, crushing volumes amounted to 3.2 million tons, driven by good cane availability and solid productivity indicators. Compared to last quarter of 2021, we increased our crushing by 1.9 million tons. This increase was mostly explained by 2021's lower effect in milling days and weaker cane productivity as a consequence of the frost that impacted Brazil's productive areas during 2021. Consequently, and despite our continuous harvest model, during December 2021 and March 2022, we decided to enter into an inter-harvest period and perform maintenance works in our mills to allow our sugarcane recover from the frost effects. On an annual basis, crushing volume reached 10.5 million tons, making a decrease of only 0.5 million tons compared to 2021 despite the late start of our crushing activities. In our next page, Number 7, we show our agriculture productivity indicators. Sugarcane yields during the last quarter of 2022 were 24% higher compared to the same period of last year, reaching 81 tons per hectare and TRS content presented a 12% improvement, amounting for 134 kg per ton. Looking at the full year picture, sugarcane yields gradually improved throughout the year, going from 44 tons per hectare in the first quarter until reaching solid levels in the fourth quarter as we expected, whereas…

The floor is now open to questions. [Operator Instructions] Our first question comes from Henrique Brustolin. Mr. Henrique, your microphone is now open.

Hi. Good morning, everyone. Thanks for taking my questions. I have two. The first one, on the sugar and ethanol business. I just wanted to hear an update on how you are seeing the commercialization strategy for the year, right, when we put together current sugar prices, the return of federal taxes on fuels and eventual opportunities that you see for exporting anhydrous ethanol. So when you put it out together, right, how that should play out in terms of your production mix in the sugar and ethanol business? And more importantly, based on the prices that you are seeing in eventual opportunities for the year, how should we think about the unitary, right, realized selling price relative to what it was in 2022? So, that's the first one on the sugar and ethanol. And the second, in terms of capital allocation, right, leverage ratio is now below the 2x threshold. There is more visibility on the sugar and ethanol business in general. So, I just wanted to hear a little bit in terms of how you are seeing the levels of CapEx for this year. And what should be the main projects that might come under way right now? Those are the two. Thank you.

Hi, Henrique. Thank you for your question. I'm going to take your second question and then I'm going to pass the floor to Renato to go in detail on the first question. On the second question regarding capital allocation, as we've been telling in all our previous calls, and as we explained clearly in our presentation some minutes ago, we are maintaining our policies. So, it's clear that 40% at minimum is going to be distributed via dividend and buyback. And then, with the rest, we still have very interesting projects. And from there, you can expect CapEx going a little bit below last year or our current projection is somewhere below 2022. But I want to separate here the two main views that we have. Number one for Argentina and Uruguay, so we just explained, we are going through some difficult situations. So, in this specific scenario, we are delaying some CapEx and making a lot of progress and detail on getting to the savings, every saving possible all along the chain and we have -- we are doing a very interesting work there that we can go into more details. But this situation where for Argentina and Uruguay, you should expect less CapEx and less maintenance CapEx in this specific part of the company. Then, when we go to the Sugar, Ethanol & Energy business, that things are going very well. The climate has gone to normal level and now Renato can go into more details. We have some very attractive projects that continue to synergize what we are currently having that makes us more sustainable, that makes us more efficient. And this is on top on continued planting in this area that we are getting some interesting results in our planting or additional planting of sugarcane. So, overall, in the sugar and ethanol business, you should expect a little bit more CapEx than in the 2022 and less in the farming business. And then, I will pass the floor to Renato to go into your first part of the question on the commercialization strategy and also if you want to add anything on the -- on this sugar and ethanol CapEx specific.

Hi, Henrique. We are positive with the scenario of both sugar and ethanol. So, in sugar, our strategy is to take advantage of our continuous harvest model. We are currently harvesting in Mato Grosso do Sul to produce as much as sugar as possible. We are maximizing sugar now in the first quarter. Just as an example, we have already crushed more than 800,000 tons and produced more than 40,000 tons of sugar. And we are producing and selling it against the March contract. We feel very good prices on average between $0.20 and $0.22 per pound. We can also increase our sugar mix compared to last year. Last year, we finished the year with 35% sugar mix. We can achieve a mix close to 50% of -- taking advantage of the higher sugar price. And we are still open in terms of hedging. Our position now we have 40% of our production hedged at an average price of $0.194 per pound. In the ethanol, we are also optimistic about the scenario. We are maximizing anhydrous ethanol. We can -- if you consider our dehydration capacity, we can produce almost 100% of anhydrous. Anhydrous today in Mato Grosso do Sul is being traded at price equivalent to $0.20 per pound, very close to sugar. And we'll also take advantage of the export markets. We have just finished transaction this week. So, the first transaction of the year exporting ethanol for 10% premium over the internal- anhydrous market. And I think it's good to mention that to our potential to export anhydrous increased compared to last year, increased by 50%. So, we can export 40% of our total ethanol production, and we will do this according to the opportunities that you'll see along the year.

That's very clear. Thanks very much.

Our next question comes from Mr. [Guilherme Paredes] (ph). Mr. Guilherme, your mic is now open.

Good morning, everyone. Thank you for taking my questions. Just a follow-up. Renato, you already said that you are able to produce 100% of anhydrous ethanol. And when you look in terms of the results, you see that there is some inventory of hydrous ethanol in the company right now, right? Can we expect that to be converted to anhydrous ethanol? Or do you seek to continue to have some hydrous ethanol sales as well given the tax benefits that we see on the market? And one second question here is related, just a clarification in terms of the outlook that you designed for the next year with 15% increase in terms of crushing. But if you could go through in terms of what do you expect in terms of total sugar recoverable, right, so looking at TRS content as well? I would appreciate that. Thank you.

[indiscernible] Thank you for your question. At this moment, we are thinking in producing 100% anhydrous ethanol using our bagasse, as the price of energy is low at this moment, so the spot price of energy is low. So, the best use of our bagasse is to get the hydrous ethanol and transform it anhydrous, and that's what we plan to do right now. If hydrous price react in the future, we might change this view. And the second part of the question, please, could you repeat?

Sure, Renato. It's basically just trying to understand 15% higher crushing for next crop season, right? Can you go through in terms of the TRS content when you look in terms of total TRS production, where should we be looking at for the next crop seasons?

Yes. I think the weather is very good at this moment. The weather is good. The rainfall is very good in terms of volume, and also, distribution of rain. So that's why we're expecting a recover of our sugarcane yields. Of course, last year was impacted by the frost. So, the yield that we had last year was not normal. So, I think this recovery is expected. In terms of TRS, it depends a lot how the rain is going to be distributed along the year. At this moment, we think that we're going to have 15% in TRS processes, which takes into account both the yields and the TRS content.

Great. Thank you, Renato.

Our next question comes from Ms. Larissa Perez. Ms. Larissa, your mic is now open.

Larissa, are you there? We can't hear.

It looks like Larissa has a technical problem. We'll keep with the next question from Santhosh Seshadri. Your mic is now open.

Hi, good morning, everyone. Thanks a lot for taking up my questions. So, firstly, do you have any plans to accelerate your hedging positions for 2023 and possibly even into 2024, given that the sugar prices or the other crop prices might come down from the current levels. If you think that is not necessary, what would be the rationale for that? So that's my first question. And my second question would be on the cost. You mentioned about the potential dilution of cost on a higher crushing volumes. So, can you talk about your expectation for other input costs as well? And for 2023, should we expect flattish COGS per unit or any further decline in cost? If you can quantify the impact, that would be great. Thank you.

Okay. Thank you for your question, Santosh. Renato, you want to take the sugar and ethanol part of the question?

Okay. So, regarding the costs, as it was mentioned here, we are expecting increase in yields and volume of sugarcane processed close to 15%. So that's why we are going to have fixed cost dilution. We have an important part of our cost is fixed. So, when we have more volume and yields, there is a higher dilution, which helps a lot our total cash cost. In terms of fertilizer and diesel, we expect that the cost is going to be much lower than it was last year. The pressure of cost, the cost is gone. But in the other hand, there are some costs that increased that offset parts of the decrease in diesel and fertilizer, which is labor and freight cost. But if you take everything into the equation, we expect the cash cost decreasing approximately 10%. And regarding the hedge, the future hedges, I think we are positive with the sugar outlook even for 2024. It seems that there is a problem in several countries, Thailand, the European Union and, especially India. So, India should not release additional export quarter. So, the market today depends a lot on Brazilian exports. So that's why we think -- and then we think that Brazil is not going to produce sufficient to offset that decline, not to mention some logistical constrain in the short-term. So, in 2023, we are taking advantage of these spikes of the market to hedge our position. And in 2024, we're still open, waiting for a better opportunity to start to hedge our position.

Thank you, guys.

And Santosh, on the hedging on -- [not only] (ph) Argentina and Uruguay production, it is an inverted market. There are many specifics of the commodities for the local market. So, we don't want to be in a very hedged position, because we expect local market to continue going up through different things, including a special dollar for the soybean sites, et cetera, et cetera.

Thanks very much. That's helpful.

Okay. So, we have this last question from Larissa from Itau. Some of them have been answered, but Victoria is going to read one of their questions that is not fully answered yet.

In 2022, you crushed 10.5 million tons of sugarcane or 0.5 million tons less than the previous harvest year. In your release, you mentioned that the company remains confident about its ability to increase crushing volumes by 15% year-over-year. Can you give us some more color on how you plan to achieve this increase other than being benefited by better weather and greater availability of sugarcane? Are there any efficiency projects that we should know about?

Yes, Renato. Yes.

Okay. So, as I was mentioning before, I think that the weather, of course, has an impact, an important impact, here especially because of the comparison of last year that was very low. But there are a lot of technologies and process that we are doing that we think that is going to increase our yields in the long run. I think a few examples of that is good nutrition. I think it's important to remember that we are replacing 48% of our mineral fertilizer needs with organic fertilizer. We are self-sufficient in potassium, so it helps a lot the yield of the sugarcane. We have also a very good plague and weed control. We have been using drones to control weeds, and also a lot of biological control to control the most important plagues in sugar can, for example, the stalk borer. We are adopting new [varieties] (ph) of sugarcane. In Mato Grosso do Sul, we have a bio factory that will produce 26 million of seeds, which is very important to release new varieties adapted to that particular region, which will eventually produce more sugarcane per hectare. And finally, we have been using a lot of two-row harvester machines. That's very important because we damage less the row of the sugarcane, improving the longevity and the yield of the sugarcane. So, those are few examples of technology and procedures that we are using that we think that is going to help a lot our yield in the long run.

Thank you, Renato.

[Operator Instructions] Since there are no more questions, this concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you everyone for participating. I hope to continue seeing you in our next event.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a great day.