Q2 2026 Verde Agritech Ltd Earnings Call

August 14, 2026

Speaker #1: Going to be talking about the brief introduction about the company, the market situation in Brazil. We're going to be looking at the financials for the second quarter when I'm going to turn that just presentation over to our CFO, Mr. Paolucci.

Speaker #1: And we're going to hold the Q&A section at the end. So let's get started. So, the company—just for you guys to have a brief idea—we recently changed the management.

Speaker #1: My name is Reberth Machado. I'm the new CEO, as I said. I'm a chemical engineer with almost 30 years of experience in the agricultural section.

Speaker #1: And technology development, both in Canada and Brazil. I spent almost 13, 14 years as a CEO in a sugarcane mill here in Brazil, recently I was working in a company in Canada converting biomass into biofuels.

Speaker #1: And I decided to join Verde as a new challenge to develop new markets in Brazil. And increase our sales, talk to different clients, focus pretty much on a B2B business.

Speaker #1: And institutional relationships. The management is still the same, Marcos Ribeiro is still our chief revenue office, and Felipe Paolucci still as the CFO for us.

Speaker #1: So talking about the investment highlights: what actually brought me into Verde? Well, Verde has already made a $500 million investment into research and development and infrastructure, and plant capacity.

Speaker #1: So there is no need for CapEx or further CapEx to reach our full capacity at 3 million tons per year of potassium production. The project is pretty much scalable.

Speaker #1: We can reach up to 6 billion tons of resources pretty quickly in Brazil without much further investment. We're located in the heart of Brazil agricultural sector.

Speaker #1: We're in the heart of Minas Gerais, pretty close to the major consumers or consumers of our products in Mato Grosso, Mato Grosso do Sul, São Paulo, Tocantins, and Goiás.

Speaker #1: We're pretty much proud of our end-to-end control. We are 100% vertically integrated, producer, meaning that we have the resource, we mine it, we grind it, we pulverize it, we transport that, and even the mixtures are made into our factories or into our facilities.

Speaker #1: We're pretty much focused on the specialty fertilizer for sustainable agriculture. Applications. Our product promotes the microbiotic of the soil, do not salinize it, and we're focused on the regenerative agricultural sector.

Speaker #1: We also have a large carbon avoidance footprint. Our product compared to potassium chloride has an 89% carbon reduction. Talking about our full value chain, that it's already in place.

Speaker #1: As I previously mentioned, we were we operate pretty much from the extraction of our resources into manufacturing into our final products. We currently have 2 plants.

Speaker #1: Plant number 1, where we do a mixture or a blend, not a blend, but a mixture of our specialty products. And we have our large facility that is focused on bulk materials, large amounts.

Speaker #1: We also have our in-house R&D facility where we test our products, where we develop new products. And we also have our field validation, where we test our own products in small areas to prove efficiency.

Speaker #1: Verde, just to give you guys an idea about Verde potential into the Brazil market and Brazilian market. Currently, Brazil imports pretty much pretty much 15 million tons of potassium chloride per year.

Speaker #1: Given our resources sitting at close to 6 billion tons, per year we have enough to supply Brazil 100% of its demand of potassium chloride, or potassium, in that case.

Speaker #1: For over 70 years.

Speaker #2: So just one comment that I'd like to make here. As everyone knows, our focus targets are in the states that are in green, in this page.

Speaker #2: And the factory is located in the west of Minas Gerais state, and the Green Point here also in the chart shows where heritage and Marcos are based actually.

Speaker #2: So they are closer to the market, closer to the key customers where we really want to be side by side, to be close to them, have face-to-face meetings.

Speaker #2: And this we think that will be something that will help us a lot in the coming periods. And also, our sales force team, our key field sales, are also located in São Paulo, Goiás, Minas Gerais, and south of Mato Grosso.

Speaker #2: So we believe really believe that the freight, competitive there is much better for us. The cost per ton is lower, and then it's easier to provide if needed discounts to clients or even though have higher gross margin and gross profit in this situation.

Speaker #2: So just to highlight how big the focus market is, it's around 6 to 7 million tons per year. It's where we want to focus, where we want to sell, and if you make account calculation just on 3 million tons per year, that's our full capacity.

Speaker #2: It's not even like close to 5% or around this on market share. So the opportunity for the coming periods it's big. As we'll see in the coming charts a bit on the crisis in the sector, etc., but we do believe that it's going to be ending soon and then we're going to come back to growth situation, etc.

Speaker #1: That's a great that's a great point, Felipe. Like I previously like I said before as well, like we're strategically located in the heart of Brazil's major production or agricultural sector in Brazil, pretty close to all the states that Felipe just mentioned.

Speaker #1: Talking about the potential, our potential economics, like I said, the company has made already the investment to reach 3 million tons capacity production per year.

Speaker #1: And that would actually yield us a 200 close to 200 million dollars Canadian dollars in revenue. That would be equivalent to 70 million in EBITDA.

Speaker #1: Which is 35% of our EBITDA in terms of percentage. And yielding a net profit close to 40 million. So our focus here today is to expand our commercial operations to increase our sales volume, in Brazil currently current situation for the market in Brazil, it's quite challenging as we're going to see ahead.

Speaker #1: But that's our focus, and that's our major that's our potential to reach. And we're working towards that. Talking about the Brazilian economic scenario, like we're sitting we're in a year of elections in Brazil.

Speaker #1: That actually causes a lot of uncertainties and people are you know, actually reevaluating investments in Brazil. Our interest rate in Brazil is still quite high, actually dropped 25 points, but still sitting at 14%.

Speaker #1: It's worth it's good to know that nobody actually gets the money at 14%. So we're talking about a spread over, you know, between 6 and 7 or sometimes 8%, which actually brings us to a total cost of borrowing around 20 to 22% a year, which is quite high.

Speaker #1: There is a big credit crunch in Brazil currently. All the producers and our clients or distributors they're lacking access to new money. Because of, you know, they have been they have been in the past, they have been highly leveraged.

Speaker #1: So the renewal rate of new investments in Brazil today is quite low. And in that situation, everybody's reviewing their investment opportunities and holding further investments a bit.

Speaker #1: The Canadian dollar is also the Canadian dollar is actually also dropped in terms of the eyes. Our currency in reais increased. And which, you know, in terms of sales, it might help us because the producers are able to export more products.

Speaker #1: So it might have a higher demand. But that actually has a counter effect on our revenue and our numbers in Canadian dollars. I already mentioned that the credit quality the credit crunch in Brazil, it's quite high currently.

Speaker #1: And that creates a big burden or overburden in our credit analysis. Internally. And we have been reluctant to sell too much. We're being very thorough in a credit evaluation internally.

Speaker #1: Which also which also reduces the volume of sales over time. And like I said, there is an election year this year is an election year in Brazil, and also the El Niño forecast adds to the overall complexity of the situation for the agricultural sector in Brazil.

Speaker #1: Just to highlight the crisis in the agricultural market, we're not just talking about Verdi, but all the major producers like Raizin, AgroGalaxy, Lavoro, they're also fighting for company restructuring.

Speaker #1: Pretty much it's the beginning of a chapter 11 filing. So just to highlight that again, it's not just the situation, it's an overall market complexity that is dropping the volumes.

Speaker #1: We're not being able to hit the margins that we had before. As we're going to see in the next graphic.

Speaker #2: Yeah. I just want to point here that I'd like to comment as well the second bullet in the left side of the chart. Lavoro prepares to file for bankruptcy protection.

Speaker #2: This is some this is the key point that hit our Q2 bad debt provision. As I will present as well in our numbers, we have around 4 to 500K on bad debt provision.

Speaker #2: This is basically on the Lavoro side, where we had sales for them around 2023 and 2022. Then the collect should be made on 2024, but they did not pay.

Speaker #2: The renegotiate for one year, and then they paid for the first for the first state of settlements. And then just three months ago, they said, well, we will not pay anymore.

Speaker #2: We need to renegotiate, etc. So according to our policy, we were pushed to make this provision. And this, of course, hit our EBITDA in half a million K.

Speaker #1: Fantastic. Like I said before, that's the agricultural cycles in Brazil since 1980. You guys can see that the fertilizers even though the grain prices went up 134% based on a baseline that began in 1980, the fertilizer cost actually went almost double.

Speaker #1: It went to 236 226% up. So that actually shortened the margins for the agricultural or for the producers in Brazil. And therefore, everybody's reevaluating, like I said before many times, their investment strategies for this year.

Speaker #1: I believe that's it for me. I'm going to be turning over to Mr. Palucci, our CFO. He's going to go through the highlights of our financials.

Speaker #1: And we're going to host a Q&A section at the end. Thank you very much.

Speaker #2: Okay. Thank you, Reberth. So first, in the key highlights that we have for the quarter, our revenue in Q2 was 3.42 compared to 4.8 in Q2 2025.

Speaker #2: And sales volume were 46,000 tonnes compared to 80,000 last year. So excluding freight cost or delivery investments, etc., the average revenue per tonne increased to 40 compared to 38.

Speaker #2: The profitability remaining resilient and average gross profit per tonne here exclude freight impact again, as we saw in another chart that this has a significant impact in our numbers.

Speaker #2: But we still have a better result from 22 to 23 dollars per tonne. So it means that our efforts that we are doing in terms of cost reductions and SG&A reductions, they are bringing it to us some results.

Speaker #2: I will talk a bit more about these reductions as well in the next charters. As for SG&A, decreased by 10% in Q2 compared to last year, EBITDA before no cash events was 1.2 million negative compared to 0.2 last year.

Speaker #2: And net loss, we were 1.2 worse than we had in the previous year. So in terms of cash, as June of 2026, the company held 4.1 million in cash.

Speaker #2: And 5.7 million short-term receivables compared to 2.4 million last year. And 8.2 short receivables in June 2025. Here is the key chart of the financials.

Speaker #2: We can see the first lines here with the impact the numbers per tonne. So we have the total sales, Q2, and then year to date comparing against prior year.

Speaker #2: You can see that the revenue had a significant improvement, but here have the freight impact, as I've mentioned. We're going to see this also later on in the next chart excluding these impact to us.

Speaker #2: We can see here as well the allowance for expected credit loss, which is the bad debt provision, as I spoke before, 518,000 Canadian dollars, basically mainly due to the Lavoro situation.

Speaker #2: And the end of the day, the EBITDA, we had an worse number in around 1 million Canadian dollars compared to last year. The operational summary, we can see two tables.

Speaker #2: The first one including the freight revenue and then the second one excludes these impact from our results. The key takeaway from this chart, in my opinion, is that you can see that the gross margin end of the day remains resilient, remains in 57% compared to 58% last year.

Speaker #2: So this means that in Q2, we were able to, even though with lower volume, to dilute fixed cost because we've made some new projects and also we are working really hard to reduce expenses of contracts, fixed costs, SG&A, teams.

Speaker #2: We've made some reductions. Actually, we are made some more reductions on headcounts in this week and the factory. And we are now prepared, even if we have higher volumes to come, we are prepared to deliver because we do have in the plan to a very good capacity of 8 mills and then we are not using them now at this point, but we can increase volume without increasing costs.

Speaker #2: So my expectation in the coming periods is when we start to see the volume growing again, increasing again, we will see for sure our production cost per tonne going down.

Speaker #2: So since as Reberth showed in the charts before, we are fully verticalized company. We have since the mining, the mining up to the delivery to the client.

Speaker #2: So most of the costs are controlled and then we of course, we can mitigate impact EBITDA and improve numbers once we grow in volume, SG&A, and costs, fixed costs will be diluted.

Speaker #2: So it's our expectation for the coming periods. In terms of SG&A, we can see here the key reductions we've made. So first, for example, in sales and marketing expense over 12% reductions.

Felipe Paolucci: To see the volume growing again, increasing again, we will see for sure our production cost per ton going down. Since, as Hebert showed in the charts before, we are a fully verticalized company. We have since the mining up to the delivery to the client, so most of the costs are controlled. We, of course, can mitigate, impact the EBITDA, and improve numbers once we grow in volume. SG&A and costs, fixed costs will be diluted. It is our expectation for the coming periods. In terms of SG&A, we can see here the key reductions we have made. First, for example, in sales and marketing expense, over 12% reductions. Of course, fees paid to sales agents also decreased because the volume went down and this is automatically impacted.

Felipe Paolucci: To see the volume growing again, increasing again, we will see for sure our production cost per ton going down. Since, as Reberth showed in the charts before, we are a fully verticalized company. We have since the mining up to the delivery to the client, so most of the costs are controlled. We, of course, can mitigate, impact the EBITDA, and improve numbers once we grow in volume. SG&A and costs, fixed costs will be diluted. It is our expectation for the coming periods. In terms of SG&A, we can see here the key reductions we have made. First, for example, in sales and marketing expense, over 12% reductions. Of course, fees paid to sales agents also decreased because the volume went down and this is automatically impacted.

Speaker #1: I see the volume growing again, increasing again. We will see, for sure, our production cost per ton going down. Since Herbert showed the charts before, we are a fully verticalized company.

Speaker #2: Of course, that free space paid to sales agents also decreased because of the volume went down and then this automatically impacted. But the key point, like SG&A, for example, general administrative expenses were revising contract like SAP, Salesforce, and amount others contracts legal, counsel, etc., we are trying to mitigate as much as we can and working on renegotiation and reduction on costs.

Speaker #1: We have—since the mining, the mining up to the delivery to the client, so most of the costs are controlled. And then we—of course, we can mitigate impact A, B to the—and improve numbers once we grow in volume.

Speaker #1: SG&A and other fixed costs will be diluted, diluted, so that's our expectation for the coming periods. In terms of SG&A, we can see here the key reductions we've made.

Speaker #2: That's the key point that my team and I we are working on this periods. So now I think we shared come back to Q&A, Reberth.

Speaker #1: So first, for example, in sales and marketing expense, over a 12% reduction. Of course, that free space paid to sales agents also decreased because the volume went down, and then this is automatically impacted.

Speaker #2: This is what I have for numbers. So please, if you did not share and send your question so far, please do so. We do have already a few questions here.

Speaker #2: So I will address these to Reberth so I can together with him answer the questions the one that are related to factory or financial, I can support and then the other ones on marketing and clients, etc., Reberth will handle.

Speaker #1: But the key point, like SG&A, for example—general and administrative expenses—we're revising contracts like SAP, Salesforce, and among other contracts: legal, counsel, etc. We are trying to mitigate as much as we can and are working on renegotiation and reduction of costs.

Felipe Paolucci: The key point like SG&A, for example, general and administrative expenses, we are revising contracts like SAP, Salesforce, among other contracts, legal counsel, et cetera. We are trying to mitigate as much as we can and working on the negotiation and reduction on costs. That is the key point that my team and I, we are working on these periods. Now I think we should come back to Q&A. Hebert, this is what I have for numbers. Please, if you did not share and send your questions so far, please do so. We do have already a few questions here. I will address this to Hebert so I can, together with him, answer the questions, the ones that are related to factory or financial I can support, and the other ones on marketing and clients, et cetera, Hebert will handle.

Felipe Paolucci: The key point like SG&A, for example, general and administrative expenses, we are revising contracts like SAP, Salesforce, among other contracts, legal counsel, et cetera. We are trying to mitigate as much as we can and working on the negotiation and reduction on costs. That is the key point that my team and I, we are working on these periods. Now I think we should come back to Q&A. Reberth, this is what I have for numbers. Please, if you did not share and send your questions so far, please do so. We do have already a few questions here. I will address this to Reberth so I can, together with him, answer the questions, the ones that are related to factory or financial I can support, and the other ones on marketing and clients, et cetera, Reberth will handle.

Speaker #1: Okay. Thank you Felipe for your brief update on the economics, on the financials. Sorry, not the economics, but financials. I'm going through the questions here as we speak.

Speaker #1: That's the key point that my team and I are working on during this period. So now, I think we should come back to Q&A, Herbert.

Speaker #1: And there is a few questions about production. The volumes that appears to have been substantially lower than last year. And that's true, but it's not just a situation for Verdi.

Speaker #1: This is what I have for numbers, so please, if you have not shared and sent your question so far, please do so.

Speaker #1: Everybody is facing the same. Since I joined Verdi as June 1st, I've been traveling throughout Brazil pretty much, talking to different clients, distributors, consultants, professors, attending seminars and conferences.

Speaker #1: We already have a few questions here, so I will address this to Herbert so that, together with him, I can answer the questions that are related to the factory or financial matters.

Speaker #1: I can support, and then the other ones on marketing and clients, etc., Herbert will handle.

Speaker #2: Okay, thank you, Felipe, for your brief update on the financials. Sorry, not the economics, but the financials. I'm going through the questions here as we speak, and there are a few questions about production.

Reberth Machado: Okay. Thank you, Felipe, for your brief update on the financials. Sorry, not the economics, but financials. I am going through the questions here as we speak and there is a few questions about production. The volumes that appears to have been substantially lower than last year, and that is true. But it is not just a situation for Verde. Everybody is facing the same. Since I joined Verde as 1 June, I have been traveling throughout Brazil pretty much, talking to different clients, distributors, consultants, professors, attending seminars and conferences. It is unanimous that the volumes have substantially dropped in terms of sales in Brazil, not only for Verde. Our 40% to 42% drop in volume is pretty much aligned with the current or overall market today. Some people are doing even worse. But that is one of the points here. There is a question here about debt renegotiation.

Speaker #1: And it's unanimous that the volumes have been have substantially dropped in terms of sales in Brazil, not only for Verdi. Our 40, 42% drop in volume, it's pretty much aligned with the current or overall market today.

Speaker #2: The volumes that are—that appear to have been—substantially lower than last year. And that's true, but it's not just a situation for Verde.

Speaker #1: Some people are doing even worse. But that's one of the points here. There is a question here about that renegotiations. Felipe, you would like to expand on that?

Speaker #2: Everybody's facing the same. Since I joined Verde as of June 1st, I've been traveling throughout Brazil pretty much, talking to different clients, distributors, consultants, professors, attending seminars and conferences.

Speaker #2: Yeah, sure. So the question is like from could you give us an update on that renegotiation where discussions currently stand? What kind of timeline expect and what outcome Verdi is seeking?

Speaker #2: Are you primarily looking for extended maturities and lower interest costs, or is free store reduction also part of the discussions? Well, what I can see, yes, we are talking with our creditors of banks.

Speaker #2: And it's unanimous that the volumes have substantially dropped in terms of sales in Brazil, not only for Verde. Our 40–42% drop in volume is pretty much aligned with the current or overall market today.

Speaker #2: We have 7 to 8 creditors at this point. And they are aware of the current situation and we are willing to renegotiate in the middle term.

Speaker #2: Some people are doing even worse. But that's one of the points here. There is a question here about the renegotiations. Felipe, would you like to expand on that?

Speaker #2: It's not something that will happen fast. It takes months, sometimes even years. Or one year or more to finalize the plan, etc. We do not know yet what will be able to achieve the renegotiation, but for sure we will have to face the repayment according to our middle term plan.

Reberth Machado: Felipe, you would like to expand on that?

Speaker #1: Yeah, sure. So the question is: who can give us an update on that renegotiation, where discussions currently stand, what kind of timeline to expect, and what outcome Verde is seeking?

Felipe Paolucci: Yeah, sure. The question is like, could you give us an update on debt renegotiation where discussions currently stand, what kind of timeline expect and what outcome Verde is seeking? Are you primarily looking for extended maturities and lower interest costs, or is principal reduction also part of the discussions? Well, what I can see, yes, we are talking with our creditors, our banks. We have 7 to 8 creditors at this point, and they are aware of the current situation, and we are willing to renegotiate in the middle term. It is not something that will happen fast. It takes months, sometimes even years, or 1 year or more to finalize the plan, et cetera. We do not know yet what we will be able to achieve the renegotiation, but for sure we will have to fix the repayment according to our middle term plan.

Speaker #1: Are you primarily looking for extended maturities and lower interest costs, or is principal reduction also part of the discussions? Well, what I can see is we are talking with our creditors at banks.

Speaker #2: So it does not make sense to set up a plan that we are not able to achieve or to fulfill in the next 12 months.

Speaker #2: So the key points like what I'm trying together with Reberth has a great experience on this in his past and other companies as well.

Speaker #1: We have seven to eight creditors at this point, and they are aware of the current situation. We are willing to renegotiate in the medium term.

Speaker #2: We are working on to try to do something that will be definitely for a long-term and will support us. So this could be just an interest rate reduction, just a rephasing the debts or even though a discount in the key point.

Speaker #1: It's not something that will happen fast. It takes months, sometimes even years—or one year or more—to finalize the plan, etc. We do not know yet what we will be able to achieve with the renegotiation, but for sure we will have to fit the repayment accordingly to our medium-term plan.

Speaker #2: I think I'll keep moving because the next one is related to the factor as well, Reberth. So the production yeah.

Speaker #1: Oh, you want to do that? Okay. I was going to read that, but go ahead. The inventory, the.

Speaker #1: So it does not make sense to set up a plan that we are not able to achieve or fulfill in the next 12 months.

Felipe Paolucci: It does not make sense to set up a plan that we are not able to achieve or to fulfill within the next 12 months. The key point like what I am trying together with Hebert, he has a great experience on this in his past in other companies as well. We are working on to try to do something that will be definitely for a long term and will support us. This could be just an interest rate reduction, just rephasing the debts or even though a discount on the key point. I think I will keep moving because the next one is related to the factory as well, Hebert. The production-

Felipe Paolucci: It does not make sense to set up a plan that we are not able to achieve or to fulfill within the next 12 months. The key point like what I am trying together with Reberth, he has a great experience on this in his past in other companies as well. We are working on to try to do something that will be definitely for a long term and will support us. This could be just an interest rate reduction, just rephasing the debts or even though a discount on the key point. I think I will keep moving because the next one is related to the factory as well, Reberth. The production-

Speaker #2: Yeah. Magnus made some good questions here. Production Q2 appears to have been materially higher than the tonne sold, resulting in an inventory bill. What's this intentional stockpiling the anticipation of stronger Q3 sales?

Speaker #1: So the key point, like what I'm trying—together with Herbert, who has great experience in this from his past and from other companies as well.

Speaker #2: Or are these tones originally expected to be sold during Q2, but customers purchase were delayed? Given the storage characteristics of the crushed product, how do you manage the risk of holding significant finished product inventory?

Speaker #1: We are working to try to do something that will definitely be for the long term and will support us. So this could be just an interest rate reduction, just a rephasing of the debts, or even a discount at the key point.

Speaker #2: Well, first, the capacity in plan two is quite big. So once we start to produce, we had some sometimes 300, 400 tons per hours being produced.

Speaker #1: I think I'll keep moving because the next one is related to the factory as well, Herbert. So, the production—

Speaker #2: Yes, I was— Oh, you want to do that? Okay. I was going to read that, but go ahead. The inventory, the—

Reberth Machado: Yeah. Oh, you want to do that? Okay. I was going to read that, but go ahead. The inventory, the-

Speaker #2: So sometimes it's better to have a higher inventory than just to produce a lower amount. We have in question in the end, so I can address now that was asking.

Felipe Paolucci: Yes. Magnus made some good questions here.

Speaker #1: Yeah, Magnus made some good questions here. Production in Q2 appears to have been materially higher than the tons sold, resulting in an inventory build. Was this intentional, in anticipation of stronger Q3 sales?

Reberth Machado: Yeah.

Felipe Paolucci: Production for Q2 appears to have been materially higher than the tons sold, resulting in inventory build. What is the intention now? Stop filling the anticipation of stronger Q3 sales? Or were the tons originally expected to be sold during Q2, but customers' purchase were delayed? Given the storage characteristics of the crushed product, how do you manage the risk of holding significant finished product inventory? Well, first, the capacity in plant 2 is quite big. Once we start to produce, we had sometimes 300, 400 tons per hour being produced. Sometimes it is better to have a higher inventory than just to produce a lower amount. We have in our warehousing. There is also another question there, so I can address now that was asking, is there any risk in your product in terms of humidity or any other risk once you have it in inventory?

Speaker #2: Well, is there any risk in your product in terms of humidity or any other risk once you have it in inventory? No, we do not have this risk because as we'll see, you can see in the photo of our plan two, the inventory is located inside of our warehouse, which is fully covered without any type of risk to get wet or to get dry in the sun, etc.

Speaker #1: Or are these tons originally expected to be sold during Q2, but customers' purchases were delayed? Given the storage characteristics of the crushed product, how do you manage the risk of holding significant finished product inventory?

Speaker #1: Well, first, the capacity in Plant 2 is quite big. So once we started to produce, we had sometimes 300, 400 tons per hour being produced.

Speaker #2: So we are pretty comfortable to have a bit more inventory there. And our capacity is like over 15,000 tons in this warehousing. So we did not build this inventory to just to achieve or to supply Q3, but it's like an expertise as well and operation costs to mitigate costs to turn on and off, turn on and off the line.

Speaker #1: So, sometimes it's better to have a higher inventory than just to produce a lower amount. We have, in our warehousing—there is also another question, then, so I can address now that was asking.

Speaker #1: Well, is there any risk in your product in terms of humidity or any other risk once you have it in inventory? No, we do not have this risk because, as we’ll see—you can see in the photo of our Plant 2—the inventory is located inside of our warehouse, which is fully covered without any type of risk to get wet or to get dry in the sun, etc.

Felipe Paolucci: No, we do not have this risk because as you can see in the photo of our plant 2, the inventory is located inside of our house, which is fully covered without any type of risk to get wet or to get dry in sun, et cetera. We are pretty comfortable to have a bit more inventory there. Our capacity is over 15,000 tons in this warehouse. We did not build this inventory just to achieve or to supply Q3, but it is an extra stage as well, an operation cost to mitigate costs to turn on and off the line. Sometimes we just run for 8 hours straight in a day, and maybe we keep 2 days to stop running because we have the spare capacity at this point. That is a key point that-

Speaker #2: So sometimes you just run for eight hours straight. And maybe we skip two days without running because we have the spread capacity at this point.

Speaker #2: So this is the key point that we've made.

Speaker #1: There's another good question here, Felipe. Given the current sales volume and inventory built during Q2, have you considered temporarily reducing your halt in the mining and production activities and selling from existing inventories to preserve cash?

Speaker #1: So we are pretty comfortable to have a bit more inventory there. And our capacity is like over 15,000 tons in this warehousing. So we did not build this inventory to just to achieve or to supply Q3, but it's like an expertise as well and operation cost to mitigate cost to turn on and off, turn on and off the line.

Speaker #1: If so, what the level of inventory do you currently have available? And how long could you support expected sales? As Felipe mentioned previously, we're doing a really big reduction in headcounts.

Speaker #1: Currently, as we speak, I would say. Especially to address that. We're giving the lower volume expected for Q3 and Q4. We're reducing the production.

Speaker #1: So sometimes you just run for eight hours straight, you know, and maybe we skip two days without running because we have the spread capacity at this point.

Speaker #1: So, this is the key point that...

Reberth Machado: There is another good question here, Felipe. Given the current sales volume and inventory built during Q2, have you considered temporarily reducing or halting the mining and production activities and selling from existing inventories to preserve cash? If so, what level of inventory do you currently have available, and how long could you support expected sales? As Felipe mentioned previously, we are doing a really big reduction in headcounts currently as we speak, I would say, especially to address that. Given the lower volume expected for Q3 and Q4, we are reducing the production, our team count, and what we have in hand in terms of our inventory, even though it is low, we do not keep high inventory. We pretty much produce just in time, per se.

Speaker #2: There's another good question here, Felipe. Given the current sales volume and inventory built during Q2, have you considered temporarily reducing your halt in the mining and production activities, and selling from existing inventories to preserve cash?

Speaker #1: Our team count. And what we have in hand in terms of inventory, even though it's low, like we don't keep high inventory, we pretty much produce as just in time per se.

Speaker #2: If so, what is the level of inventory you currently have available, and how long could you support expected sales? As Felipe mentioned previously, we're doing a really big reduction in headcount.

Speaker #1: We're going to be able to we're going to be able to address the volume or the demands for the next years, but at a much lower cost because of the reduction in headcount.

Speaker #2: Currently, as we speak, I would say, especially to address that, given the lower volume expected for Q3 and Q4, we're reducing the production.

Speaker #2: And also just something important as well. It's good to have 8 to 10,000 tons in stock all the time because sometimes it could happen a big customer or a big client just had some issues, for example, with other supplier and then says we will be able to answer and ship right away 10,000 tons.

Speaker #2: Our team count, and what we have in hand in terms of inventory even though it's low, like we don't keep like high inventory, we pretty much produce as, you know, just in time per se.

Speaker #2: I would say yes, we can. So it's not that expensive because remember that we do not have any inventory in special products. Products that use phosphate or any other like boron or sulfur we do not have them in inventory.

Speaker #2: We're going to be able to reduce—we're going to be able to address the volume, or the demands, for the next years, but at a much lower cost because of the reduction in headcount.

Reberth Machado: We are going to be able to address the volume or the demands for the next years, but at a much lower cost because of the reduction in headcount.

Speaker #2: We do make products produce them around according to the orders. So the key inventory that we have is the cap product. It is, let's say, the cheapest one in terms of cost and working capital.

Felipe Paolucci: Also, just something important as well. It is good to have 8,000 to 10,000 tons in stock all the time because sometimes it could happen, a big customer or a big client just had some issues, for example, with other supplier and then says, "Will you be able to answer and ship right away 10,000 tons?" I would say, "Yes, we can." It is not that expensive because remember that we do not have any inventory in special products. Products that use phosphate or any other like boron or sulfur, we do not have them in inventory. We do make them, produce them according to the orders. The key inventory that we have is the K Forte product, which is, let us say, the cheapest one in terms of cost and working capital.

Speaker #1: And also, just something important as well: it's good to have 8,000 to 10,000 tons in stock all the time because, you know, sometimes it could happen that a big customer or a big client just had some issues, for example, with another supplier and then says—so we'll be able to answer and ship right away 10,000 tons.

Speaker #2: So in the end of the day, the impact is not that relevant to have 8 to 10,000 tons on cap inventory on hands.

Speaker #1: And again, like Felipe already mentioned, we have no problems in terms of shelf life for the product. We have no problem in storing the product for a certain amount of time.

Speaker #1: I would say yes, we can. So it's not that expensive, because remember that we do not have any inventory in special products. Products that use phosphate, or any other, like boron or sulfur—we do not have them in inventory.

Speaker #1: And there's one final question here that I think it's interesting for us to address, Felipe. It's a hello. Person is asking about, do you have a big buyers coming in soon or should we expect big clients to take a few more trimesters before actual deals are closed?

Speaker #1: We do make products and produce them according to the orders. So the key inventory that we have is the CAP product, which is, let's say, the cheapest one in terms of cost and working capital.

Speaker #1: The expectation is that all the major clients that had bought from us in the past have not been have not made the decision yet of buying.

Speaker #1: So, at the end of the day, the impact is not that relevant to have 8,000 to 10,000 tons of cap inventory on hand.

Felipe Paolucci: At the end of the day, the impact is not that relevant to have 8,000 to 10,000 tons on K Forte inventory on hand.

Speaker #1: So we're addressing that. We're talking weekly with them to see if they have changed their minds. Our sales team are still working hitting the road, talking to different people.

Speaker #2: And again, like Felipe already mentioned, we have no problems in terms of shelf life for the product. We have no problem storing the product for a certain amount of time.

Reberth Machado: Again, like Felipe already mentioned, we have no problems in terms of shelf life for the product. We have no problem in storing the product for a certain amount of time. There is one final question here that I think it is interesting for us to address, Felipe. Hello person is asking about, do you have big buyers coming in soon, or should we expect big clients to take a few more trimesters before actual deals are closed? The expectation is that all the major clients that had bought from us in the past have not made the decision yet of buying. We are addressing that. We are talking weekly with them to see if they have changed their minds. Our sales team are still working, hitting the roads, talking to different people, looking if the new decision has been made. To address your question, yes.

Speaker #2: And there's one final question here that I think is interesting for us to address, Felipe. Hello, this person is asking: Do you have big buyers coming in soon, or should we expect big clients to take a few more trimesters before actual deals are closed?

Speaker #1: Looking if the new decision has been made. So say your question to address your question. Yes. Like we do expect those big clients to come back this year.

Speaker #1: But they're not as as we have been told, they're not ready to make that decision as yet. So and we can see that throughout the market.

Speaker #2: The expectation is that all the major clients that had bought from us in the past have not been have not have not made the decision yet of buying.

Speaker #1: Everybody is delayed in terms of volumes, expectations for this year. It's not any different for us at Verde. There's a question here about deterioration of the product.

Speaker #2: So we're addressing that. We're talking, you know, weekly with them to see if they have changed their minds. Our sales team is still working, you know, hitting the road, talking to different people, looking to see if a new decision has been made.

Speaker #1: Felipe already addressed that. There's no problem in terms of shelf life for us to store. Some questions about Magnis. That we cannot disclose at the time.

Speaker #2: So say your question to address your question, yes. Like we do expect those big clients to come back this year. But they're not as as we have been told, they're not ready to make that decision as yet.

Reberth Machado: We do expect those big clients to come back this year, but as we have been told, they are not ready to make that decision as yet. We can see that throughout the market. Everybody is delayed in terms of volumes expectations for this year. It is not any different for us at Verde. There is a question here about deterioration of the product. Felipe already addressed that. There is no problem in terms of shelf life for us to store. Some questions about manganese that we cannot disclose at the time. At the right timing, you are going to see a press release when that is due.

Speaker #1: The right timing you're going to see a press release when that's due.

Speaker #2: So, as we can see throughout the market, everybody is delayed in terms of volumes and expectations for this year. It's not any different for us at Verde.

Speaker #2: There is an interesting one I have it. Can you please discuss who are your best customers if there was no bread brand? Is it location based?

Speaker #2: Crop based? Which crops work best with our product? Why do people sometimes prefer KCL than our fertilizers? That's a good one.

Speaker #2: There's a question here about deterioration of the product. Felipe already addressed that. There's no problem in terms of shelf life for us to store it.

Speaker #1: Fantastic. We're currently focusing on Perrin and well, long-term crops like coffee, eucalyptus, sugarcane, citrus. Crops that actually last more than a short cycle of 120 and 160 days.

Speaker #2: There were some questions about Magnis that we cannot disclose at this time. At the right timing, you're going to see a press release when that's due.

Felipe Paolucci: There is an interesting one I have. Can you please discuss who are your best customers if there was no credit granted? Is it location-based, crop-based? Which crops work best with our products? Why do people sometimes prefer KCl than our fertilizers?

Speaker #1: There is an interesting one I have here. Can you please discuss who are your best customers if there was no bread brand? Is it location-based?

Speaker #1: It seems that our product works best on that. We also have excellent results in soya and corn. We have some protocols that are coming with excellent results.

Speaker #1: Crop-based? Which crops work best with our product? Why do people sometimes prefer KCl over our fertilizers? That's a good one.

Speaker #1: We're not ready to share those numbers yet, but initial numbers are showing a great application for those crops yet. And why people still prefer potassium chloride over our fertilizer?

Reberth Machado: Well, we are currently focusing on long-term crops like coffee, eucalyptus, sugarcane, citrus. Crops that actually last more than a short cycle of 120 and 160 days. It seems that our product works best on that. We also have excellent results in soya and corn. We have some protocols that are coming with excellent results. We are not ready to share those numbers yet, but initial numbers are showing a great application for those crops yet. Why people still prefer potassium chloride over our fertilizer? Well, people have just used potassium chloride for decades. Our fertilizer is a substitute for that, right? It is a much better product. It releases potassium over time. There is no drifting of potassium, leaching of potassium with water, with the rain, or with the raining season. But people are sort of reluctant.

Speaker #2: Fantastic. We're currently focusing on perennial and, well, long-term crops like coffee, eucalyptus, sugarcane, and citrus—crops that actually last more than a short cycle of 120 to 160 days.

Speaker #1: Well, people are just used to potassium chloride for decades. Our fertilizer, it's a substitute for that, right? It's a much better product. It releases potassium over time.

Speaker #1: There's no drifting of potassium. Lixiviation of potassium with water with the rain. Or with the rainy season. But people are sort of reluctant. They have to test year over year to be comfortable and make switch completely from potassium chloride to our products.

Speaker #2: It seems that our product works best on that. We also have excellent results in soya and corn. We have some protocols that are coming with excellent results.

Speaker #2: We're not ready to share those numbers yet, but initial numbers are showing a great application for those crops. And why do people still prefer potassium chloride over our fertilizer?

Speaker #1: That's how I see our products today in the market. It's just a matter of time and people to get results year after year just to become more comfortable.

Speaker #2: Well, people have just been used to potassium chloride for decades. Our fertilizer—it's a substitute for that, right? It's a much better product. It releases potassium over time.

Speaker #2: Yeah. And something else as well. I think the last 12 months, since mid-2025 or the beginning of 2025, we've made some agreements with some people from universities, universities consultants in the market.

Speaker #2: There is no drifting of potassium—of potassium with water, with the rain, or during the rainy season. But people are sort of reluctant. They have to test year over year to be comfortable and make the switch completely from potassium chloride to our products.

Speaker #2: So they are trying and working for our product. And now the results are coming. So after they have the results, they'll be able to recommend to their clients as well.

Reberth Machado: They have to test year over year to be comfortable and make switch completely from potassium chloride to our products. That is how I see our products today in the market. It is just a matter of time and people to get results year after year, just to become more comfortable.

Reberth Machado: They have to test year-over-year to be comfortable and make switch completely from potassium chloride to our products. That is how I see our products today in the market. It is just a matter of time and people to get results year after year, just to become more comfortable.

Speaker #2: So we do believe that with these strong results on hand, that we are seeing already, we'll be able in the short term to be to make the farmer more comfortable to use our product than keep using KCL.

Speaker #2: That's how I see our our our products today in the market. It's just a matter of time and people to get you know results year after year just to become more comfortable.

Speaker #2: Because once they have their recommendation from their consultants, then it will be able to be easier for them to ship. At least part of their K2O usage from KCL to our product.

Speaker #1: Yeah. And something else as well. I think the last 12 months since mid-2025 or the beginning of 2025, we've made some agreements with some people from universities, universities consultants in the market.

Felipe Paolucci: Yeah. Something else as well, I think the last 12 months, since mid-2025 or beginning of 2025, we have made some agreements with some people from universities, consultants in the market. So they are trying and working for our product, and now the results are coming. So after they have the results, they will be able to recommend to their clients as well. So we do believe that with the strong results on hand that we are seeing already, we will be able, in the short term, to make the farmer more comfortable to use our product than keep using KCl. Because once they have the recommendation from their consultants, then it will be able to be easier for them to shift at least part of their K2O usage from KCl to our product. So we are, like we said before, the company, not just Verde.

Speaker #2: So we are like we said before, the company not just Verde. I just saw now this morning that Bank of Brazil, which is the largest bank in Brazil, that works with agribusiness.

Speaker #1: So, they are trying and working with our product, and now the results are coming in. After they have the results, they'll be able to recommend it to their clients as well.

Speaker #2: They had made public the results yesterday and then they had over 6.2% of clients not paying them of late receivables. So this is something that's huge.

Speaker #1: So we do believe that with the strong results on hand, that we are seeing already, we'll be able in the short term to be to be to make the farmer more comfortable to use our product than keep using KCL because once once they have their recommendation from their consultants, then it will be able to be easier for them to ship.

Speaker #2: They are not providing a lot of cash as they did before. And the loans are getting more expensive and harder for the farmers. So in the end of the day, we see a lot of orders coming.

Speaker #1: At least part of their K2O usage from KCl to our product. So, like I said before, the company is not just Verde. I just saw now this morning that Banco do Brasil, which is the largest bank in Brazil that works with agribusiness.

Speaker #2: And then we have the management on credit area that I support her itself. So we cannot sell to everyone. So we are not sending to a lot of clients and potential clients that they were good in the past, but now they have loans.

Felipe Paolucci: I just saw this morning that Banco do Brasil, which is the largest bank in Brazil that works with agribusiness, they had made public their results yesterday, and they had over 6.2% of clients not paying them of late receivables. This is something that is huge. They are not providing a lot of cash as they did before, and the loans are getting more expensive and harder for the farmers. At the end of the day, we see a lot of orders coming, and we have the management on credit area that I support her itself. We cannot sell to everyone. We are not selling to a lot of potential clients that they were good in the past, but now they have loans. We are able, in Brazil, to see the maturity of the loans when they have to repay it.

Speaker #1: They had made public the results yesterday, and then they had over 6.2% of clients not paying them, of late receivables. So this is something that's huge.

Speaker #2: We are able in Brazil to see the maturity of the loans when they have to repay it. So we see that some clients are coming to buy for like $1 million to be paid in less than 12 months.

Speaker #2: And if they are not able to renew this payment, I cannot sell to them because if they do not have credit to the banks, they won't be able to renew it.

Speaker #1: They are not providing as much cash as they did before, and the loans are getting more expensive and harder for the farmers. So, at the end of the day, we see a lot of orders coming in, and then we have the management on the credit area that I support her as well.

Speaker #2: And then they might not pay us in the next cycle. So this is something that we're really expect to change in the coming period, maybe next year already.

Speaker #2: And then we're going to see again banks refinance and renewing their loans and then be easier for us not to block orders and increase sales volume.

Speaker #1: So, we cannot sell to everyone. So, we are not selling to a lot of clients and potential clients who were good in the past, but now they have loans.

Speaker #1: In Brazil, we are able to see the maturity of the loans, when they have to be repaid. So we see that some clients are coming to buy for, like, $1 million to be paid in less than 12 months, and if they are not able to renew this payment, I cannot sell to them. Because if they do not have credit with the banks, they won't be able to renew it, and then they might not pay us in the next cycle.

Speaker #1: So sorry, Felipe.

Speaker #2: No, no, that's the key point. I don't know. Just in terms of credit because we are losing a lot of opportunities. But I prefer not to sell, not me, but the company decided.

Felipe Paolucci: We see that some clients are coming to buy for BRL 1 million to be paid in less than 12 months. If they are not able to renew this payment, I cannot sell to them, because if they do not have credit to the banks, they want me to renew it, and they might not pay us in the next cycle. This is something that we really expect to change in the coming period, maybe next year already. We are going to see again, banks refinancing and renewing their loans, and it will be easier for us not to block orders and increase sales volume.

Speaker #2: And not to sell, then selling do not receive. That's the key point.

Speaker #1: Yeah. That's going to make us put us in an even worse situation in terms of cash position. One last question here. As for the big buyers, I was thinking about new big clients like the sugarcane.

Speaker #1: So this is something that we really expect to change in the coming period, maybe next year already. Then we're going to see, again, banks refinancing and renewing their loans. Then it will be easier for us not to have to block orders and to increase sales volume.

Speaker #1: Any news about them? Well, I can speak that because about that because I was a part of a big manufacturing facility or a big producer of ethanol and sugar in Brazil many years ago.

Speaker #2: So sorry Felipe.

Speaker #1: And now that I'm back and trying to be in touch with everybody with my networking and everybody that I know in the industry, the complaint has been the same.

Reberth Machado: Sorry, Felipe.

Speaker #1: No, no, that's the key point. I don't know. Just in terms of credit, because we are losing a lot of opportunities, but I prefer not to sell—not me, but the company decided.

Felipe Paolucci: No, that is the key point I want. Just in terms of credit, because we are losing a lot of opportunities, but I prefer not sell, not me, but the company decided, not sell than selling but not receive. That is the key point.

Speaker #1: The sugar prices are way low, sitting at 16 cents per pound. The ethanol prices are not even are not any better than that because there is a lot of influx from corn ethanol in Brazil that is actually dropping the prices for the sugarcane producers.

Speaker #1: And not to sell, then selling, do not receive. That's the key point.

Reberth Machado: Yeah. That's going to put us in an even worse situation in terms of cash position. One last question here. As for the big buyers, I was thinking about new big clients like sugarcane. Any news about them? Well, I can speak about that because I was a part of a big manufacturing facility or a big producer of ethanol and sugar in Brazil many years ago. Now that I'm back and trying to be in touch with everybody, with my networking and everybody that I know in the industry, the complaint has been the same. The sugar prices are way low, sitting at 16 cents per pound. The ethanol prices are not any better than that because there is a lot of influx from foreign ethanol in Brazil that is actually dropping the prices for the sugarcane producers.

Speaker #2: Yeah, that's going to put us in an even worse situation in terms of cash position. One last question here: as for the big buyers, I was thinking about new big clients like the sugarcane.

Speaker #2: Any news about them? Well, I can speak about that because I was part of a big manufacturing facility, a big producer of ethanol and sugar, in Brazil many years ago.

Speaker #1: And the cost, just to give you guys an idea, when I left the sector in 2019, the cost for a hectare to be planted in cane was around $7,000 per hectare.

Speaker #1: Now people are facing anywhere between 15 and 20 thousand dollars. And the prices are still the same when I left seven years ago. So I hope that answers the question.

Speaker #2: And now that I'm back and trying to be in touch with everybody, with my networking and everybody that I know in the industry, the complaint has been the same.

Speaker #2: The sugar prices are you know way low, sitting at 16 cents per pound. The ethanol prices are not even you know are not any better than that because there is a lot of influx from foreign ethanol in Brazil that is actually dropping the prices for the sugarcane producers.

Speaker #1: And we're going to put a stop here on the presentation. Hoping to see you guys in the next quarter with much better numbers and results.

Speaker #1: Thank you, everybody.

Speaker #2: And the cost, just to give you guys an idea, when I left the sector in 2019, the cost for a hectare to be planted in cane was around $7,000 per hectare.

Reberth Machado: The cost, just to give you guys an idea, when I left the sector in 2019, the cost for a hectare to be planted in cane was around 7,000 BRL per hectare. Now people are facing anywhere between 15,000 BRL and 20,000 BRL. The prices are still the same when I left seven years ago. So I hope that answers the question, and we're going to put a stop here on the presentation. Hoping to see you guys in the next quarter with much better numbers and results. Thank you, everybody.

Speaker #2: Now people are facing anywhere between $15,000 and $20,000, and the prices are still the same as when I left seven years ago. So I hope that answers the question.

Speaker #2: And we're going to put a stop here on the presentation. Hoping to see you guys in the next quarter with much better numbers and results.

Speaker #2: Thank you everybody.

Felipe Paolucci: Thank you.