SLC Agrícola Q3 2026 Earnings Call - Record Soy and Cotton Yields Drive Margin Expansion as Leverage Peaks and Cash Conversion Looms

André, Moderator/Investor Relations, SLC Agrícola: They are our CEO, Aurélio Pavinato, and our CFO and IRO, Ivo Brum. It’s a privilege to be with you this morning. Please note that this conference call is being recorded and will be available on the company’s investor relations website, together with the presentation. For those who require simultaneous translation, we have this feature available on Zoom under the globe icon called Interpretation at the bottom of the screen. Please select it and choose your preferred language, Portuguese or English. If you’re listening in English, you can mute the original Portuguese audio by clicking on Mute Original Audio. For the Q&A session, please submit your questions using the Q&A icon at the bottom of your screen. Your name will be announced so that you can ask your question live, and a prompt will appear asking you to turn on your microphone and camera.

If you prefer not to do so, please write "no microphone" at the end of your question, and I will read it aloud. We would like to remind you that the information in this presentation, together with any statements made during the conference call regarding SLC Agrícola’s business outlook, operational and financial projections, reflect management’s current beliefs and assumptions, and are based on information currently available. Forward-looking statements are not guarantees of future performance, as they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operating factors may affect SLC Agrícola’s future performance and cause actual results to differ materially from those expressed in such forward-looking statements. With this, I would like to turn the call over to our CEO, Aurélio Pavinato, to begin the presentation. Pavinato, please go ahead. Thank you, André.

Aurélio Pavinato, CEO, SLC Agrícola: Good morning, ladies and gentlemen, and welcome to SLC Agrícola’s third quarter 2026 earnings conference call. We appreciate the participation of our shareholders, analysts, investors, and all other attendees. Please, let’s move to slide four, in which we will make some comments on the cotton market. Global cotton and supply fundamentals remain sustained at levels that were higher than the ones seen in 2025. Supply fundamentals are relatively supportive of prices. Global cotton consumption for the 2026/27 crop year is estimated at approximately 123 million bales, compared with a projected production of 118 million bales. As a result, there is a global deficit of 5.3 million bales. One of the main factors behind this global deficit is crop conditions in key U.S. growing regions, particularly Texas.

Cotton production estimates in Asia also warrant close attention, especially in India, where rainfall has been below average throughout the current crop cycle. In Brazil, by contrast, progress in soybean planting in Mato Grosso increases the likelihood that cotton will be planted within the optimal window. Recent rainfall has also improved soil moisture conditions. Against this backdrop, Brazil is expected to continue gaining market share internationally, further consolidating its position as one of the world’s leading cotton suppliers. The 25/26 crop year already reflects this trend, with Brazilian cotton exports running above the historical average for the period. Let’s move now to slide five to talk about soybeans. Soybean prices on the CBOT spot market have recovered significantly throughout 2026. Expectations of greater supply have coincided with a lower weather risk premium.

Prospects for a large South American crop have strengthened as conditions in Brazil have improved and Argentina’s production estimate has been revised upward. This has led to some easing in prices. Despite favorable planting evolution, weather over the coming month will remain a key factor in determining the production potential. The global supply and demand balance remains tight, with a deficit estimated at 0.3 million metric tons according to the latest USDA report. Demand for Brazilian soybeans remains strong. Exports from January through September exceeded volumes recorded in the same period in previous years, underscoring Brazil’s strong position in international markets and its competitiveness. In addition to international demand, Brazil and the U.S. continue to see domestic demand grow, supported by their respective national biofuel programs. This is driving demand for renewable fuels as part of the global effort to decarbonize the energy mix.

Let’s move now to slide six to discuss corn. Throughout 2026, corn prices on the Chicago Board of Trade and in the Brazilian market have been highly volatile. The global corn balance is also tightening. According to the latest USDA data, the market is expected to post a deficit of 18.4 million metric tons. In the U.S., production expectations have been revised slightly downward, while in South America, the USDA expects larger crops in Argentina and Brazil. In Brazil, attention is gradually shifting to the second corn crop, whose yields will depend on the planting window and weather conditions in early 2027. Meanwhile, exports and demand from the ethanol industry remain strong. Let’s move to slide eight to review the final results for the last year’s crop, 25/26.

In the third quarter 2026, we completed the crop cycle with new yield records, 4,125 kilograms per hectare for soybeans and 2,127 kilograms per hectare of cotton lint. Compared with the national average, our soybean yield was 11.1% higher and our cotton yield was 3.6% higher. Corn yield came in at 6,746 kilos per hectare, 12.8% below our target and 18.8% lower than in the previous crop year. As we noted in previous earnings releases, our fields, particularly those in Maranhão and the Araguaia Valley in Mato Grosso, were planted outside the optimal window and received less rainfall during crop development. Even so, yields were 6.6% above the national average. These results were achieved in a crop year in which we expanded our total planted area by 13.4%, thus demonstrating the company’s ability to combine growth, scale, and operating efficiency.

Now let’s advance to slide nine, in which we’ll talk about the unit costs for the 25/26 crop in comparison with the previous period. Unit costs declined 8%, mainly due to the record yield achieved in the 25/26 cycle, which helped lower costs per unit produced. For corn, unit costs increased by 21%, mainly because of the high comparison based in 24/25 when the crop also posted record yields, and consequently, lower cost per unit. For soybeans, despite higher yields in 25/26, unit costs increased by 5.9%. The yield improvement in this case was not enough to offset higher production costs, mainly due to the need to replenish soil nutrients and increase spending on crop protection. On slide 10, we show our current hedging position for the 25/26 crop. Soybeans and cotton from the 25 and 26 crop have already been almost entirely sold.

Prices in BRL have held steady compared with the previous crop, despite a more challenging market scenario. For corn, 95% of the crop has been sold at prices in BRL approximately 6% higher than in the previous crop year. Let’s now move to slide 11, which summarizes the Bloco Mato Grosso land acquisition. SLC Agrícola’s acquisition of 8,900 hectares of arable land from Grupo Radar was approved without restrictions by the Anti-Monopoly Agency on October 30. The transaction totals BRL 669.6 million, of which BRL 24.9 million relates to existing infrastructure on the properties. I’ll now turn the call over to Ivo Brum to discuss our financial performance. Ivo, please go ahead. Thank you very much, Pavinato. Please, let’s advance to slide 13, where we highlight some items from our income statement.

Ivo Brum, CFO and IRO, SLC Agrícola: Turning to our financial results, net revenue for the nine months of 2026 remained virtually flat, down just 0.4% at BRL 6.3 billion. Lower invoice volumes of cotton, corn, and cotton seed were largely offset by higher soybean sales, whose revenue increased 7% during the period. The lower volume of cotton invoiced in the quarter and in the first nine months is related to the lower production in the 2024-2025 crop. For the coming periods, we’ll have a different scenario considering the record production achieved in 2025 and 2026, and the high proportion of that crop already sold and hedged. Of the volume produced, 93% of cotton and 48% of corn are still to be invoiced, representing significant potential for cash conversion in the coming periods. Despite relatively stable revenue, profitability improved significantly. Gross profit increased 14.5%, reaching BRL 2.7 billion, and gross margin rose from 37.5% to 43.1%.

This performance was driven mainly by soybeans, which generated gross profit of BRL 1 billion, up 13.5%, in addition to the positive impact of fair value measurement of biological assets. Record soybean yields of 4,125 kilograms per hectare also contributed to this result. This improvement was reflected in operating income, which increased 15.8% to BRL 1.86 billion, with operating margin expanding from 25.5% to 29.7%. In other words, we delivered significant improvement in operating performance despite virtually flat revenue. Net income for the first nine months totaled BRL 673.6 million, up 5.9%, while net margin increased from 10.1% to 10.8%. The increase in gross profit contributed positively to these results, partly offset by higher administrative expenses and taxes. It’s worth noting that the Sierentz operation was fully consolidated in the first month of 2026, however, the contribution from this operation started only from July onward.

Financial results were also affected by higher net debt, despite the improvement in average cost of debt. Adjusted EBITDA totaled BRL 1.74 billion, down 14.4% in the comparison with the same period, with a margin of 27.8%. This decline was related to the lower invoiced volumes of cotton and corn mentioned earlier. Finally, adjusted free cash flow was negative at BRL 1.8 billion for the first nine months. During the period, we made payments related to the company’s acquisitions, including Mato Grosso areas in Grupo Radar, Sierentz, Fazenda Paladino, and Unaí, not to mention investments in infrastructure. It’s important to note, however, that cash generation turned a corner in the third quarter, with positive adjusted free cash flow of BRL 346 million. We have also completed the crop production cost payment cycle, and invoicing of inventory is expected to strengthen the company’s cash generation in the near future.

Let’s now move to slide 14 to discuss the company’s investments in CapEx. CapEx totaled BRL 1.1 billion in the first nine months of 2026. Throughout 2026, we continue to allocate capital to projects that improve operating efficiency. Spending on construction of facilities increased, driven mainly by the progress in our irrigation projects. In the first nine months, our investments in irrigation totaled BRL 164.4 million, while we are directing resources to projects that reduce weather risk, make yields more stable, and improve predictability of results. Irrigation is particularly important in Bahia, where a significant share of our projects is located. By improving water security, we can reduce our dependence on weather conditions, make better use of the potential of our fields, and support more stable production over time. Fazenda Piratini is a good example.

We completed a new phase of the irrigation project with investments totaling BRL 113 million in the first nine months, and we physically increased our area under irrigation in size, doubling it. This new infrastructure will be available for the 2026/2027 crop. Including both the first and second crops, the planned irrigated area at Fazenda Piratini will total 23,200 hectares. We also invested BRL 65.7 million in the cotton gin of Fazenda Parnaguá. Let’s move now to slide 15, to talk about our debt position. We ended the third quarter with adjusted net debt of BRL 7.1 billion and leverage of three times, measured as adjusted net debt to adjusted EBITDA. In recent periods, we have allocated capital to strategic land acquisitions, infrastructure, and irrigation to expand our productive capacity and strengthen the long-term value of our assets.

In the third quarter, we also made an advance payment for the Grupo Radar land acquisition, in addition to payments for Sierentz and acquisitions of Fazenda Paladino and the property at Unaí. As we move forward with these investments, we have also been managing our liabilities to maintain a capital structure suited to the long-term nature of the assets. Long-term debt increased from 78% of total debt at year-end to 89% in the third quarter. This shift was supported by the issuance of CPR-F notes in an amount of BRL 515 million. This transaction extends our debt maturity profile and broadens our financial alternatives. The entire amount was converted into U.S. dollar exposure through a swap. We also saw a decline in the average cost of debt.

The average cost of BRL-denominated debt stood at 14% per year at the end of September, compared with 15.3% at the year-end 2025. The cost of U.S.-denominated debt fell from 7.5% to 6.3% a year. Therefore, although leverage increased, the debt profile improved. The company has already paid 100% of its crop production costs, while 93% of cotton and 48% of cotton remain to be invoiced. This, of course, is a very significant cash conversion potential. We remain focused on leverage and discipline in capital allocation, seeking to preserve liquidity and maintain a sound financial structure. Now, I’ll turn the call back to Pavinato to discuss the outlook for the 2026/2027 crop. Please let’s move to slide 17. The quarter also marked the start of the 2026/2027 crop, which is progressing in line with our operating plan.

Aurélio Pavinato, CEO, SLC Agrícola: We currently estimate total planted area of 860,000 hectares, 3.2% above the previous year. We continue to prioritize efficient crop allocation, taking into account agronomic conditions, yield potential, and the expected profitability from each region. We are still at the beginning of the crop cycle, with a substantial season ahead of us, but we have made a good start. Planting is progressing as planned, within favorable agronomic windows, and rainfall distribution has been adequate so far. Let us move now to slide 18, to discuss the projected cost per hectare for the 2026/2027 crop. Our look is positive. Costs per hectare are virtually stable compared with the previous crop year, increasing by just 2.2% in BRL. This is a highly competitive increase compared with the market average and against projected inflation of 4%.

Fertilizer prices have put pressure on costs, and this has been partly offset by lower crop protection prices, both priced in US dollars. It is important also to remember that we actively manage our foreign exchange exposure on costs. Currently, 57% of our production costs are dollar-indexed, and 43% are denominated in BRL. Through hedging, we seek to match this cost exposure with future US dollar revenues, thus reducing the impact of exchange rate volatility on crop margins. Even in an environment that remains challenging for some inputs, we are starting the 2026/2027 crop with costs under control, reflecting disciplined procurement, risk management, and our ongoing focus on operating efficiency. Let us now turn to slide 19 to discuss the yield estimates for the 2026/2027 crop. Our estimates reflect expectations, our expectations for crop potential based on historical performance, that is, trend lines, and also the maturity of our fields.

At this point, we do not expect to revise our published yield estimates. Planting is off to a good start, and soybeans are showing good yield potential. Now, on slide 20, we discuss our seed business. In 2027, we expect to continue growing this line of business, particularly soybeans, for which we project a volume of 76,000 big bags, up 5.6% from the previous year. For cotton, we project 6,300 big bags, keeping volumes stable, while the forecast for Brachiaria grass seed is 4,000 big bags. Our strategy combines supplying our own operations with pursuing commercial opportunities, gradually increasing this business contribution to the company. Next, on slide 21, we present our outlook for the cattle business. Cattle production complements our crop operations, increases value generation per hectare, and acts as a third crop within our business model.

We estimate cattle sales of 76,000 head in 2026 and expect that figure to reach 112,000 head in 2027, an increase of approximately 48%. This growth supports our strategy of making better use of our land and resources, diversifying revenue streams, and increasing the value generation potential of our operations. Now, moving to slide 22, we show our current hedging position for the 2026/2027 crop. Based on prices and commitments to date, we have now 65% of our soybean crop and 63% of our cotton and 6% of our corn crop hedged. Soybean and cotton prices in BRL are 4.9% and 3.9% higher, respectively, than in the previous crop. For corn, the increase is approximately 3%. Now, on slide 24, we discuss the 2027/2028 crop. We have already made strategic progress in procurement of inputs, with 72% of our potassium chloride requirements secured.

We continue to monitor the market to look for the best opportunities. Our market intelligence, combined with the scale of our operations, gives us an important edge and helps us build a competitive cost base for the next crop. Now, moving to slide 26, I would like to review some ESG highlights and awards. SLC Agrícola was recognized in the 2026 ESG Yearbook in the agriculture and livestock category, earning a place among the 100 companies with the strongest ESG track records in Brazil. This recognition is based on independent assessments and highlights the continued progress of the company in several areas, and also reinforces its position as a sustainability leader in Brazilian agribusiness. For the fifth consecutive year, SLC Agrícola received the Gold Seal from the Brazilian GHG Protocol Program, its highest accolade for the company’s 2025 greenhouse gas emissions and removals inventory.

This recognition underscores the consistency, transparency, and maturity of the company’s climate management. Regenerative agriculture practices, including no-till farming, crop rotation, soil cover maintenance, and efficient resource management, helped sustain carbon removal recorded during the period. Now, finally, let’s move to slide 27 to talk about how we support employee education and development through the Youth and Adult Education Program. In August, Fazenda Porteira in Pará launched its first elementary-level adult education class in partnership with the Department of Education of Santana do Araguaia. 15 employees enrolled. In 2026, a total of 783 employees enrolled in this program and studied at the company’s farms. 370 enrolled at elementary level and 413 at high school level. This initiative supports SLC Agrícola’s strategy of developing human capital and promoting educational inclusion. Well, this program started in 2018, and we now have more than 600 employees that graduated.

André, Moderator/Investor Relations, SLC Agrícola: Thank you all for joining us. We will now open the floor for the Q&A. Thank you very much, Pavinato. We will now begin the Q&A. Please submit your questions using the Q&A icon at the bottom of your screen. Your name will be announced so that you can ask your question live, and a prompt will appear on the screen asking you to turn on your microphone and camera. If you prefer not to do so, please write "no microphone, no camera" at the end of your question, and I will read it aloud. Our first question is from Mr. Gabriel Barra, Citi. Could you please go ahead and turn on your camera and microphone, Gabriel? Gabriel, are you with us? Hello, can you hear me? Yes, we can. Thank you. Maybe you can see me now as well.

Gabriel Barra, Analyst, Citi: Thank you so much, André and Ivo and Pavinato, for the earnings conference call. I think it’s been a long time since we saw an environment with so many uncertainties, both globally and domestically, in relation to the currency rate, in relation to climate. So when you put all of it in the same basket, you see that it’s a very volatile environment. Thinking of capital allocation, well, we saw some investment cycles in the company that were very adequate, very correct investments were made in an interest rate environment that was perhaps a little more shifting, especially in a time in which you were investing in land acquisitions and pursuing acquisitions such as the Radar opportunity. And considering what we expect in the coming years in Brazil with lower currency exchange rates and also higher interest rates, what will change in your strategy?

Are you thinking of changing your strategy? Are you thinking of deleveraging more quickly? What will change against this backdrop? Now, thinking of the short term, at what level will leverage be at the end of the crop year? I know that there’s still invoicing going on, and the crop year will be better than expected together with the interest rates. I know it’s very difficult to give us guidance on that, but what can you tell us about leverage and the deleveraging cycle? What can we expect for next year? Thank you very much, Gabriel Barra, for your questions. Let me start with the second question. As you said, the environment is now filled with uncertainties. So the idea in a condition like this is to try to act very cautiously. With interest rates higher, of course, we would invest less.

Aurélio Pavinato, CEO, SLC Agrícola: With a depreciated currency exchange, for us, this is very beneficial, in fact, because we are exporters and we have income streams in USD, so we’ll get benefits, and this will more than offset the increase in financial expenses. The climate, well, we know how it goes. There are expectations of the Super El Niño hitting, and as I often say, there’s no reason why you have to suffer in advance in relation to the climate. Sometimes the weather predictions don’t turn out to be as we expected. Now, it’s raining more in the south and raining less in the center-north of the country. But less rainfall in the center-north of the company hasn’t really hurt us. It’s not insufficient, the amount of rainfall we’re getting. So, in summary, planting has outperformed the previous cycle, in fact, so far.

Ivo Brum, CFO and IRO, SLC Agrícola: We are starting the second crop planting sooner in a better planting window than last year. So, as I said, you have to take the weather predictions with a grain of salt. We’re always exposed to climate. In the geopolitical scenario, we are now, of course, in a condition in which we have to be a little more cautious in relation to the investments we make. Okay, Gabriel Barra, just adding to Pavinato’s answer, with the exception made to the acquisition of areas in Mato Grosso, I think that everything had been factored in our budget. We got the approval of the board in relation to the 2026 budget, and the only thing that is off the picture is the debt. In the last meeting with the board, the board allowed us to approve land acquisition with a sale-leaseback, but it’s not easy to do a sale-leaseback.

You have to get the profitability you expect. Sometimes with interest rates up to 14%, many times the investors are not attracted to that proposition. When the investor sees the potential and the appreciation of land, then they know it’s worth it. So now that we found this investor, we can make this transaction. Now, about deleveraging. This is a sensitive issue because we need to generate cash for that. Usually, in the second half of the year, we start generating cash, because everything from the 2025, 2026 has come in, and now we have to sell cotton and corn. So if you look at our history, the third quarter is the one in which we reach the highest debt level, and now we’ll start deleveraging. Now we have, for example, this quarter, free cash flow of BRL 346 million already.

And now we have a lot more cotton to invoice. Gradually, leverage will fall, so we are not going to grow planted area. We will generate more cash. Our expectations are then, they’re going to fall back to target two times to reach that level once again. Thank you very much, Ivan and Aurelio. Thank you, Gabriel. Our next question is from Isabella Simonato, Bank of America. Isabella, could you please turn on your camera and microphone? Hello, can you hear me? Hello, Isabella. Yes. Thank you very much, Pavinato, Ivo, and RI team. Well, in relation to climate, we see that soy planting has progressed substantially and that climate didn’t stand in the way, right? Now, climate in Mato Grosso seems to have dried up a little bit, so I want to know whether this is a warning sign for you.

Isabella Simonato, Analyst, Bank of America: Looking to the future, you need rain as late as what? I just want you to give me a little more color on the deadlines, on what the warning signs are in relation to the planting window, planting that’s more advanced than it should be. Now, the next question, you were not expecting, but you really have made a lot of progress in potassium procurement. I don’t remember having witnessed this in other occasions. So I would like to ask you the reason why. Was it an opportunistic purchase? Were you trying to ensure supply? Do you think this is no longer a concern? What are you seeing in the area of fertilizers in spite of all the disruptions caused by geopolitics? Do you think that there is a critical point in 2027? Thank you very much, Isabella.

Aurélio Pavinato, CEO, SLC Agrícola: Well, about the climate, Mato Grosso needs to get rain in November, December, and a little bit in January for confirmation of our expectations in soybeans. We believe that rains would be insufficient in October, and it wasn’t. There are some specific areas in Mato Grosso where there is deficient moisture, not enough rain, but there are weather forecasts saying that it will rain next week. So, it’s really in the production phase that soybeans take a hit if there is no rain. So in the month of November, we’ll probably see that rain has been adequate, rainfall has been adequate. I saw some pictures of a neighboring farmer with significant drought, but that’s not the case for us. Actually, it’s in the west of Mato Grosso. One of the regions we were concerned with was the Araguaia Valley, and it’s been raining like clockwork really well.

Now speaking of Bahia and Maranhão, we need rainfall all the way to February. So the planting in Bahia for soybeans was good as well. We are now closing the planting season, and we’ll start harvesting by the end of February. So we need rainfall in January and February. So, there’s still a way to go before we confirm the yield expectations and the crop expectations. We still have around four months. Thinking of soybeans, now, for the second crop, which is corn and cotton, the good news is that we’ll plant in the right time. Corn in February, for example. Since El Niño will lose strength by the end of April and May, we don’t expect that there won’t be enough rain by the end of the cycle.

So with this, we’ll have regular second crop, because there were expectations, "Well, there will be a delay in soybeans. There won’t be enough rainfall." This will, of course, jeopardize the second crop. That’s not the case. The second crop is moving forward as planned. This is what’s positive so far in terms of planting. Now, after January in Mato Grosso, it actually rains too much. So it’s actually good when it rains a little less. Not in Bahia. In Bahia, it doesn’t rain enough, so we don’t want this in January. But for Mato Grosso, it’s actually positive when there’s a little less rain. About fertilizer, yes, we purchased potassium for 2027, 2028. There was a drop in prices, and prices have declined to an attractive level. That’s why we decided to ensure we had as much potassium as needed.

Potassium is not really affected by the conflict, by the war. It comes from Canada, and so it didn’t increase in price that much, but it went back to the levels of last year. We are buying for 2027 and 2028, and at a lower level that we had purchased potassium for the current crop. Now, nitrogen is directly linked to natural gas prices, so it’s very volatile. It almost doubled in prices, now hovering around $400, in the case of urea as well. It really depends on oil prices. If there is a decline in oil prices, we believe that there will be an adjustment in fertilizer prices very quickly.

Now, what we envision as a structural change in global prices is phosphorus, because it’s suffering, on one hand, with the war, availability of sulfur, and we know that batteries are taking up a lot of sulfur in their production. Historically, sulfur used to have a price of $100 per ton. It’s now at $1,200, and now it’s down to $870 per ton. That’s why some phosphate plants in Brazil closed doors. This is a structural change in phosphorus, and this, of course, will reflect in increased prices all over the world. It’s an increase in production costs. We’re keeping track of the movements, but this is not linked only to oil. There’s a second factor, which is the competition for sulfur. We are always monitoring the market as soon as we can.

When we think the price is attractive, I think that our purchasing was very effective in the last year. When I look at the fertilizer basket that we use today, it’s now 25% more expensive than last year. It’s 38% higher than the historical standards in the past decade. This is a global scenario, because structural prices are changing because of the war, because of oil prices. When oil prices go down, once again, we believe that fertilizer prices will go down too. Thank you very much, Pavinato. Thank you, Isabella. Our next question is from Henrique Brustolin. Henrique is from Bradesco BBI. Could you please turn on your microphone and camera, please? Hello. Pavinato, André, thank you so much. I have two questions. Firstly, about sales of cotton. We saw a quarter that was a little sluggish in comparison to the previous quarter.

Henrique Brustolin, Analyst, Bradesco BBI: Well, you had record production volumes in the 2025/2026 crop year that is now being sold. When we think that this represents 40% in the same year and then the next one, sixth one, we would expect record volume for cotton in the next quarter. I want to know, since your production volume tends to increase, thinking of the guidance, what can we expect in terms of trading? Will there be higher inventories of cotton in the future? Now going back to liability management, I think that you’ve made the first issuance in USD. Of course, there is a lower carrying cost, which is favorable. What should we expect in terms of the composition of currencies in your debt profile? Do you think that there will be changes, and will this affect the cost of your debt? Thank you very much, Henrique.

Aurélio Pavinato, CEO, SLC Agrícola: Well, cotton, historically, we deliver 40% along the year, and the rest is delivered in the following year. I think that we’re going to be slightly below 40% this year. Last year, we delivered 146,000 tons of the new crop, and this year, we’re delivering a little more than that. It depends, of course, on the deliveries in November. I think we’re going to be a little below 40. Whatever we didn’t deliver this year, we’ll deliver from January to June. Yes, because we have sold all the cotton in the previous year, and so this is the scenario in terms of cotton deliveries. The international market has demand. There are some tax issues that are getting in the way. Brazilian logistics also has limitations, as we know.

Ivo Brum, CFO and IRO, SLC Agrícola: In the second half of the year, there are some bottlenecks because everybody wants to ship in the second half. Ivo? Henrique, I think it makes sense for us to increase our participation in USD-denominated debt. Yes, we saw at the time of COVID, the interest rates were very low, so we converted most of our debt in BRL, and we believe that there would be a reduction in interest rates for next year. This has not been confirmed. In face of that, we have changed our debt profile. We are originating more debt in dollars, and we believe that we could have around 30%-35% of USD-denominated debt, because the interest rates are lower. Of course, we have some currency variations, but we are exporters, so this is not going to be a problem.

The invoices that we’ll have to receive in 2028 are going to be under exposure, and when we get from the client, we’ll pay for the CFR. I think that the migration is also favorable, because even if interest rates grow overseas, they will always be lower than Brazilian interest rates. Thank you very much, Pavinato. Thank you. Thank you, Henrique. Our next question is from Mr. Bruno Tomazetto, Itaú BBA. Please go ahead, sir. Good morning, everyone. Thank you very much. We’ve talked about Matopiba and climate conditions, but I would like to hear more about your perspective for the South region. I think that there’s still a little bit of climate risk in terms of rainfall. I would like to know whether this could lead to an upside in grain prices. A second question about the irrigation project for Paladino.

Aurélio Pavinato, CEO, SLC Agrícola: What are your expectations in terms of execution? What is the timeline? Also, when do you think that you will start reaping the rewards of this project? Well, it is raining a lot in the south, Bruno, and excessive rain is negative for crops. In corn, for example, we have nitrogen, and this, of course, harms the potential, and Paraná had to delay the planting because of excessive rain, and this will delay the second corn crop. Because of this excessive rainfall, we believe that we will have lower-than-expected production in the south. Do you think it is going to be very bad? No, only if we have really something completely out of range. For example, when it rained too much in around the ’80s, we had too much rain, and then we had really lower productivity.

In wheat, yes, and during the harvest, but historically, in the El Niño years, we get good crops in the south. But this year, we have some extreme events, and maybe it will depend on how much rain we will get on our soybeans in February through March, which is the harvesting season. Then the yield could be affected. Well, we will start investing in irrigation for Paladino next year. We are moving ahead with some activities such as drilling wells and building some reservoirs, but we will start irrigation only in 2028. By 2028, 2029, and 2030, we hope to complete the irrigation of 15,000 hectares using pivot irrigation in Paladino. Thank you very much, Bruno. Our next question is from Mr. Lucas Ferreira, JPMorgan. Lucas, could you please turn on your camera and microphone? Hello, good morning. Two questions.

Bruno Tomazetto, Analyst, Itaú BBA: Well, looking at the first nine months of the year, we saw a drop in EBITDA margin and an increase in gross profit because SG&A expenses have been outpacing the growth in demand. So, I would like to know what to expect for next year. Number two, what about your capital allocation strategy? I am not sure if you agree with me, but it is a year in which industry is under the pressure of interest rates, so in terms of margins, it is going to be a tough year for lots of companies. So, considering the need for deleveraging, could you be perhaps strategic in making an acquisition or a merger? Are you keeping your eyes open for any opportunities? Especially thinking that next year will be better for cash generation. Can you take that, Ivo? Yes. Well, about gross margin, we have the fair value measurement of biological assets.

Ivo Brum, CFO and IRO, SLC Agrícola: It has not increased or gotten better because of the fair value. We have almost nothing of cotton and corn, and we will still have the invoicing coming. So, expenses have increased because last year, we have series in just six months, and now we have it in nine months. Also, in terms of financial expenses, we have the political impact. Interest rates have increased. Debt level has increased. But basically, EBITDA, the reason for that is not a lie. We are just starting to process cotton, and most of the cotton will be delivered on the fourth quarter, and then we will see the EBITDA margin that we expect, and that, of course, we have not been able to see because of the limited volume we have delivered. Well, capital allocation, we have to see what 2027 and 2028 will be like.

Aurélio Pavinato, CEO, SLC Agrícola: Globally, we see that there is the initiation of a higher price commodity cycle. So maybe in 2027, we will see that farmers, growers, the growers who have survived 2026 will be able to pay off their debt. There will be no problem. So, of course, we use a countercyclical growth logic. So we grew in 2024, 2025, and 2026. For 2027 and 2028, we have to wait and see what the market is going to be like, and wait for our leverage to fall to make more investments in addition to the irrigation investments we have already decided on. Well, of course, it depends also on the macroeconomic scenario. Thank you very much. Thank you, Lucas. Our next question is from Guilherme Palhares, Santander. Please go ahead, sir. Palhares? Palhares, are you with us? Can you hear me now? Yes, now we can. Hello.

Lucas Ferreira, Analyst, JPMorgan: I do not think you can see my video yet. Okay. Okay, now we see you. Good morning, Pavinato, Ivan, and André. I hope that you are all well. A couple of questions. I think that while we saw the results of the biggest credit player, they talked about the position of some farmers, and I would like to hear your view of credit management in this sector. Has this influenced you in making the inputs purchases ahead of time? I would also like to hear from you, considering the tough moment for agriculture financing, has this led to a deceleration of the leasing activity? We know that in the central bank numbers, there are a lot of people that are struggling. Speaking of leaseback, we would like to see your perspective, how you view the situation in financing for agriculture.

Ivo Brum, CFO and IRO, SLC Agrícola: Well, I can say to you that financing is not affecting us because we are making the purchase and we will only pay in 2028. Our suppliers, well, at least as far as I can see, I do not see any changes or a worsening of the liquidity scenario. We get a little bit of credits for cattle and our seed business, but we are always very judicious in making choices. We do not have any problems with financing. We know that there is a worsening of the market and some opportunities can crop up, but we are more focused in cash generation next year. As Pavinato said, we have El Niño going on, and after that, we will see everything going back to normal with corn and the second crop. So if this is confirmed, we will see strong cash generation for next year. This has happened in the past.

Aurélio Pavinato, CEO, SLC Agrícola: Sometimes we make acquisitions, and when we stop making acquisitions, we quickly deleverage and bring our debt levels back to levels that we need them to be. Well, about leasing areas. It is not very common that we find high-quality leases available, as, of course, we are more judicious in making choices about leasing areas, because we have to analyze a period of 10 years in the lease. Many times, the good years do not really offset the bad ones. So we do not go on a leasing spree without very careful consideration. So we are being cautious in that. We need to assess our opportunities very carefully. Yes, I was talking about your accounts receivable and accounts payable. Do you see any opportunities? I was not really concerned about your position in relation to financing.

Well, I do not even like to talk about it, because when the market takes a turn down, the banks go look for the safe havens, and SLC is one of them. We do not use our land as collateral, because it is not needed. When there is a scenario like this, the banks that need to allocate their funding, they only look for the very large corporations with an adequate leverage, which is exactly our profile. We always have credit available from the banks if we need them, because we maintain also long-term relations with them. We are closing fertilizer purchases that will pay off only in 2028. It is really about knowing who your client is and what profile they have. Okay, thank you very much. Thank you, Palhares. Our next question is from Mr. Matheus Enfeldt from UBS. Matheus, please. Good morning. Good morning.

Guilherme Palhares, Analyst, Santander: The first question is about profitability of cotton. We believe that this is probably going to improve this quarter. Looking to the future, does it make sense to envisage an expansion of cotton areas? For example, first crop with 25%, second crop with 40%, considering the current price levels that we expect for coming years. In relation to CapEx, looking at the nine month, the company is investing BRL 800 million with the exception of land, and BRL 150 million with irrigation. Maybe in maintenance CapEx, we would have something closer to BRL 750 million. Is this a good level for us to consider for 2027? Maybe I have missed this information, but do you think that the CapEx for irrigation will be closer to BRL 100 million or BRL 150 million? I know that for now, climate seems to be moving according to plan, but when do you think we could confirm soybean yield?

Aurélio Pavinato, CEO, SLC Agrícola: Do you think only in January and February at the time of the harvest, or can we get an indication sooner than that? Thank you, Matheus. We will have confirmation only in February, because it is when the last season. In terms of cotton areas, there is this trend. We are growing our cotton areas, but at the same time, we are aware that cotton competes with polyester internationally. We need highly competitive operations in cotton. We are thinking of what farm to invest in so that we have high yields in cotton at low cost, thinking not only of this year, but of the coming years. Maybe we will see prices bouncing back. We cannot really get all excited when prices are high and believe that prices will always remain at this level. Yes, let me just complement that idea.

Ivo Brum, CFO and IRO, SLC Agrícola: Matheus, if you look at the releases, the gross profit of cotton increased 6 basis points. It is 36% gross margin against 29% last year. We have now 35.7% against 33% from the previous year. Cotton margins have improved because we are not capturing all price increases that we started getting. In the beginning of the year, it was $0.62 per pound, and it is now above $0.78. We got many price quotes above that. As for CapEx, it makes sense. This is a year in which we are not growing, so if you are not growing, we will not have maintenance CapEx. For next year, everything is tied to irrigation. Irrigation is great because the payback is in two or three years, and it gives you so much security in relation to the climate. As it has been said, we will only have complete irrigation in Paladino by 2028.

It doesn’t mean that we are going to stop our investments, but we will follow the existing schedule. Otherwise, in 2028, we cannot make all of the investments we want. The funding we got from BTG, from the operation, is the source for the investment we’re making. Thank you very much. Thank you, Matheus. Ladies and gentlemen, the earnings conference call on the third quarter 2026 is now closed. The Investor Relations department remains available to answer any questions. Thank you very much for joining us, and have a great day, everyone.