Good afternoon. Welcome to the BrasilAgro's Third Quarter 2019 Results Conference Call. Today, we will have Mr. André Guillaumon, CEO; and Mr. Gustavo Lopez, Administrative Officer and Investor Relations Officer. Today's live webcast and presentation may be accessed through BrasilAgro's website at www.brasil-agro.com. We would like to inform you that the event is being recorded. You can also find the slides on PowerPoint. Before proceeding, we would like to clarify that forward-looking statements are based on the beliefs and assumptions of BrasilAgro management and on information currently available to the Company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that conditions related to the macroeconomic scenario, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now we would like to give the floor to Mr. André Guillaumon, Chief Executive Officer. Sir, you may proceed. André Guillaumon: Good afternoon, everyone, once again for your participation. It's a pleasure to be sharing with you the results of the third quarter. Undoubtedly, for -- the agro business has been quite busy and quite complicated with constant changes, which hasn't been different for our company. But I believe we have a well-seasoned team making the best efforts possible so that despite constant adversities that we had throughout the years, we can reach the results and figures that would meet the expectations of our shareholders and the Board of our company. Undoubtedly, 2018, '19 have been challenging years considering climatic conditions and much more challenging considering macroeconomics regarding our internal environment in Brazil and also overseas. We're going to talk about our results. We undoubtedly have a hedging policy and for exchanging or protecting our revenues, and no doubt…

Thank you to all of you taking part. We're going to continue with EBITDA and adjusted EBITDA. So look, we try to improve things. Look the quarter excellent cash to show you how we try to improve things. It doesn't make sense to us to look at the quarter because the quarter in our company where we have sugarcane and we sold all the stock of the previous crops. And now we are starting to harvest the new crop. So we'd like to look ahead. And the other important point is what we do in terms of adjustment to EBITDA. We have several situations, and it gives us the results as to -- recommended to accounting rules. And sometimes it doesn't make sense to the Company. So we have a new company. So we have 50% of market share. And we should have that mark to market. When we have results, when we count -- calculate from net income and actually deducting interest, depreciation, amortization, we have a situation that sometimes it's not considered. So what we do is to extract this number. And last year, we have BRL 74 million of adjusted EBITDA, and this year, we have BRL 171 million. And so we have equity breakup. We have certain gains with beef and grains and transforming the prices. So we excluded the results of derivatives that are linked to the crops or the grains that have been sold. So what we see is that we have -- in 2019, we have EBITDA adjusted of BRL 171 million. And last year, we had BRL 70 million. And the difference comes mainly due to the sales of part of the Jatobá Farm, the rate is 106 million in result. So 2019, we sold 50 million tons of soybean, getting prices…

[Operator Instructions] Our first question comes from Pedro Soares from BTG Pactual.

I'd like to ask 2 questions very briefly, André. More in a broader macroeconomic sense. As you've mentioned, many variables impacting the industry. We mentioned considering commercial war. Now the swine fever. And I'd like to understand what you see in terms of dynamics for offer and grain prices. [SCI] has actually disclosed a report regarding crops at high levels. But the agency had quite high estimates for -- in terms of demand for the future crops. We thought it was going to drop regarding the current crop, which seemed to be quite optimistic. So I'd like to say I would be grateful if you could share your view, if you're not being too conservative or not. And another question regarding more macro view, where we have a drop of world GDP. I'd like to know whether this drop would not be offset by incentive of U.S. credits to Brazil. If you would not, in the medium term, relatively good for the country. I think this is it. André Guillaumon: Pedro, as usual, you bring intelligent questions that is food for thought, let me try to share our vision with you. Undoubtedly, they bring with conservative report, just to make a parallel on the side of supply. Well, if we talk about expecting, and it's something we should expect, that if we look at the snapshot today, we have a major delay of growth of crops in U.S. and we see the floods, snow, rainfall, et cetera, it's quite delayed. So when that happens there, farmers have to migrate, and they migrate to soybean. On the side of supply, we see -- we can see there may be an increase in the supply of soybean because there's a corn reduction. That's why the U.S. government has actually started a subsidy.…

Our next question is from Luciana de Carvalho, Banco do Brasil. You may proceed.

Good afternoon. Thanks for the opportunity. I have two questions. My first question is the lease area, 47% of production in lease area. Do you have any target by year-end? How much do you think about the increase in margin? And the second is dividend and CapEx. You paid BRL 41 million in dividend. If you could make a follow-up in terms of the dividends for the Company, what do you expect in terms of investment from now that would be grateful.. André Guillaumon: Wonderful question to everybody listening to your question. Yes, I think investors and individuals probably like your question. It's a quite interesting question. The first question -- I'm going to start with the first question, lease areas. Two things to mention here. We have a mix of lease areas. We have quite a few lease areas with sugarcane. And I can share the data more precisely giving you the breakdown. 50% of our lease areas were the sugarcane and the other, grains, a bit more. 55% grains and 45% sugarcane. When you look on the side of revenue and EBITDA, I'd say leasing has a greater weight on sugarcane than grains. So I dare say that the portfolio of lease areas of the Company is also diversified. We try to diversify products and also in the leasing activity. When you ask me about a target, I'd say that what we see the most banging on the assets in the market and have here in the part of leasing. We don't believe very much in this business model. We believe in the combination of 2 models. I would say that if we could keep on growing year-after-year as we've grown this year from 30% grown areas, we can increase our own area and the lease area, it…

Luciana, it's important -- so we talked about investment. So what's our goal? The Company in the developed areas of 30%. So we have a land bank that can maintain the sustainability of the Company. And what we understand from now on is that we have some 20% to 30% of cash generation that we get we would reinvest that. To say -- so we have to pay tax. It is fair that we have certain amount that were accumulated. And we're moving into a regime that generates results that can actually help us in the demand of -- help us in the payment of taxes. So we have stabilized between 20%, 30% of value that we capture. And we are striving to grow the Company to increase turnover and that would help us pay dividends, taxes and also seek savings so that we can seek new opportunities, acquisitions. Thank you, very clear.

Our next question is from Victor Saragiotto of Credit Suisse.

Good morning, André and Gustavo. Congratulation on your results. I’d like to follow up the question my colleagues, BTG, the scenario and the swine flu in China so and the outlook for next year. We've seen trade increase in the market many times. And we had times that we’re a bit more volatile in soybean considering freight, prices, et cetera. And my question is related to the relationship to with trading for next year. What are they seeking? Are they having more demand, more reactive demand? Can you give us an idea of how much is the price that you’ve calculated for the next crop? How much has it varied considering the current crop? That would help a lot. André Guillaumon: Well, Victor. Good afternoon. How are you? Victor, well, no doubt what have we been doing well, we managed to capture that. We managed to capture something via the market small. We captured a few things in the past considering the strategy of derivatives that we have. That is, I think, on Page eight or nine, about what we quote 10 and 21 unit size and that was an interesting strategy. Today, we have no longer this price on the screen. We managed to close interesting prices. Today, what we’ve been are doing and thought is quite different from that. We haven’t been able to get that. The trading are out of the market. I actually share this information with you, 20 days go to now the market was there’s a period we’ve been working so that this can happen. We’re going to start looking at if actually the trade remains and is back, we’ll start actually closing things. I think the price of our soybean is a combination of three drivers, A, Chicago. We have a hedge company,…

Okay, André. When we look at the Xingu region, it's a new region you moved to. It's young in grain production, and we see the market see that quite skeptically. And there is a learning curve depending on the region where you are. My question is how did your actual behave considering the estimates you had? And if you were interested in more opportunities in the Xingu region? André Guillaumon: Thank you. First, I have to promise, and I actually promised to show you the region, and that's something I disclosed to everyone. The invitation is also reinstated. I think we had great challenges there in terms of operations, where we need to crop the group controlled by LPL. We took the operations on the 11th of September and started planting or growing on the 1st of October. So it was war operation. I was there a while ago. And I was talking to Gustavo when they put everything on scale, so we have a positive. The first year of operations is positive, we closed in the first year with soybean at a number that is quite positive, about 57 bushels started growing without knowing the area. Without knowing anything about those areas and with the set of operations the machine to a third-party, the Company that was there then, and transferring to our operators, I see that with very positive eyes. We managed to have 57 bushels in the first year of operations. I think we are able to deliver much more. We still have a lot of challenges ahead we have to work with. On corn, I think the corn does not reflect the corn that is present in the region. We have to improve as the corn producers in the region maybe were too conservative and the…

Well, congratulations on the results to you and the team.

Our next question is from [indiscernible] Capital.

The first question is regarding irrigated area of the Company. What is the area in grains and sugarcane? And what's the outlook for growth? How do you see irrigation business? The second question is regarding what you think about the change in the -- about the BNDES interest policy change. How is this going to impact the Company in the short- to medium-term? André Guillaumon: [Amir], thank you very much for your question. Let me try to answer your questions in a very transparent way. Irrigated area of the Company, we have a large irrigation project that is operating in the São José unit. It's a project that is the sugarcane crop. We have two modules. One of phasing or rescue irrigation with a pilot -- well, I'll try not to be too technical, but we have a linear -- results there are linear, so they have sort of a salvation thing. And then we have the six people, that's the second project, I just mentioned to Luciana, in the sugarcane crop. Overall, our equipment is able to irrigate an area of 18,000 hectares, the linear figure has great mobility. So each type of size is operated for 700, 800 hectares because it has blades for each area, and you just move it to the whole area as the crew and you go and suction the area of the channels and then you manage to irrigate it. The irrigated area of the Company today is 18,000 hectares. We have a project that we have an installation happening in West Paraná. That’s an irrigation project that is being implemented. We’ve recently had a license from the water utility company. Now we are actually demanding electricity from COELBA Bahia. So this is a smaller project. It’s about 2,000 hectares. So the Company…

Just an additional question regarding irrigation, especially in the year, well, you have this project of 2,000 hectares. Why is it not extended? Do you think strategically this is not interesting? Or are there structural limitations of availability of water and energy because we know in those regions it's critical? Is it a matter of strategy or the cost of irrigation? Or is it a structural thing that limits it? André Guillaumon: Well, first, off the cuff, the limitation is energy. I met the Chairman of COELBA last week and we farmers have been fighting for an increase in the energy supply in the region. The transmission lines were actually auctioned and actually to a company that went bankrupt. So there is a great demand and lack of supply. So off the cuff, the answer to your question is that the lack of energy in the region is huge. The projects are feasible, that makes sense in order to have enough energy. But it's something we should look at. I understand that you understand about irrigation or you know about it. And basically, what we should do and what has been happening is that we have a new table of price list of tariffs of what we call the green flag of irrigation. And possibly when you connect to it, it won't make so much sense to have a pivot on the soybean and corn. We should seek more value-added crop. If we take the incentive of the soybean, and corn won't be so productive. So without the green tariff and the policy of this new degree that was passed, this will reduce the green flag of energy in next 5 years.

Okay, thank you. [Operator Instructions] If there are no more questions, we would like to give the floor to Mr. André Guillaumon for the final remarks. André Guillaumon: Thank you all very much to have stayed with us for 1 hour and 15 minutes. Thank you once again for the opportunity. Let us follow the efforts and drive of this team, providing us here, the management of growth and a constant search for better results, a combination of property results, operating results is what strengthens our company. Trust the work of our team, the work of our company. As Gustavo said, we have great opportunity for investment banks giving us major support, Banco do Brasil, BTG has been doing a lot of work. And Credit Suisse has just started and has been doing. So they have been actually -- they have been generating a lot of value, and we are going to close the gap. Undoubtedly, the effort has been smaller for this, and I believe the results are here. We'll keep on delivering results of that. And this is important to know and for you to know. And I wish you all a good evening and good work. Thank you very much.

The BrasilAgro teleconference is closed. Thank you all very much for your participation, and we wish you all a good afternoon.