Verde Agritech Ltd · TSX:NPK
Verde Agritech — Q1 2023 Earnings Presentation
35 slides from Verde Agritech's earnings presentation, May 1, 2023
Slide 1: Q1 2023 Update
Q1 2023 Update 1
Slide 2: Disclaimer
DISCLAIMER If you are risk averse don’t buy our stock. Don’t rely on anything on this We are not good enough for you to invest if you: presentation. This presentation contains certain forward-looking information, which includes but is not limited to, statements with respect to Verde AgriTech Ltd’s (
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Slide 4: Summary
Summary 2022 Market Overview ........................................... 05 Annual Sales ................................................... 14 Commodities prices in Brazil ................................. 06 Sales, General and Administrative Expenses . 15 Brazilian Economic Scenario ..............
Slide 5: Market Overview: K2O Consumption
Market Overview In 2022, the market experienced an oversupply of potash due to increased availability. Coupled with a 15% decrease in potash consumption in Brazil, this resulted in a 23% increase in year-end potash stock, highlighting the lower overall demand. K2O consumption in Brazil per year (mil
Slide 6: Commodities prices in Brazil
Commodities prices in Brazil Soybeans (Paranaguá) price has declined by 33% over the past 12 months, with a significant drop of 21% in the last three months. Potash prices have significantly declined, with a 67% decrease over the past year, and a sharp 22% decline in the first three months of 2023.
Slide 7: Brazilian Economic Scenario
USD/BRL Exchange Rate Brazilian Economic Scenario 6.00 5.53 5.37 5.25 5.27 5.24 5.19 4.97 4.96 5.04 5.14 5.24 5.20 5.17 5.21 5.00 4.76 Brazilian Real versus US Dollar 4.00 From January to March 2023, the Brazilian Real 3.00 decreased by 1% in relation to US Dollar, compared 2.00 to the same period o
Slide 8: Brazilian Economic Scenario
Brazilian Economic Scenario Brazilian SELIC interest rate at year end Verde's debts are tied directly to the Central Bank of Brazil's 13.75% 13.75% 12.50% 13.00% monetary policy interest rate, known as SELIC. 10.00% 10.00% 9.25% 9.00% 8.75% 7.00% With the current SELIC rate at 13,75% per year, the i
Slide 9: Brazilian Economic Scenario
Brazilian Economic Scenario Inflation in Brazil has shown a decreasing trend since May 2022. The Central Bank of Brazil has set its expectation for inflation at 5.80% for the year 2023. Furthermore, the bank forecasts inflation rates of 4.00% per year from 2024 to 2026. These projections indicate a
Slide 10: Q1 2023 Highlights
Q1 2023 Highlights Cash Cash utilised from investing activities decreased by 44% in Q1 2023, to $1.9 million compared to $3.4 million in Q1 2022. Cash and other receivables held by the Company in Q1 2023 were $34.3 million, compared to $22.3 million in Q1 2022 and $4.8 million in Q1 2021. Total loan
Slide 11: Q1 2023 Financial Statements
Q1 2023 Financial Statements All amounts in CAD $’000 Q1 2023 Q1 2022 %Δ Revenue 11,125 11,304 (2%) Production costs (1) (2,710) (2,654) 2% Gross Profit 8,415 8,650 (3%) Gross Margin 76% 77% N/A Sales and marketing expenses (1,207) (958) 26% Product delivery freight expenses (3,867) (2,973) 30% Gene
Slide 12: Operational Summary
Operational Summary All amounts in CAD, except percentages Q1 2023 Q1 2022 %Δ Tonnes sold ‘000 108 112 (4%) Average revenue per tonne sold $ 103 101 2% Average production cost per tonne sold $ (25) (24) 6% Average Gross Profit per tonne sold $ 78 77 1% Average Gross Margin 76% 77% N/A Operational Su
Slide 13: Logistics
Logistics FOB vs CIF (tonnes) 120,000 • The Company has increased the volume sold as CIF, from 60% of total sales in Q1 2022 to 68% in Q1 2023. 100,000 80,000 • Product delivery freight expenses increased by 30% in Q1 2023, to $3,9 million compared to $3,0 million in Q1 2022. 60,000 • Weighted avera
Slide 14: Annual Sales (tonnes)
Annual Sales (tonnes) 10,000,000 2 23,000,000 2 50,000,000 2 1,400,000 1 1,200,000 1,200,000 1,000,000 91% 1 800,000 800,000 27% 628,000 600,000 57% 64% 400,133 400,000 243,707 200,000 119,809 Q1 2023 29,648 - 2018 2019 2020 2021 2022 2023 PFS 10Mtpy PFS 23Mtpy PFS 50Mtpy 1 – Targeted range sales vo
Slide 15: Sales, General and Administrative Expenses
Sales, General and Administrative Expenses All amounts in CAD $’000, except percentages Q1 2023 Q1 2022 YoY Sales Expenses Sales and marketing expenses (1,070) (822) 30% Fees paid to sales agents (137) (136) 1% Product delivery freight expenses (3,867) (2,973) 30% Total Sales expenses (5,074) (3,931
Slide 16: Sales Channels
Sales Channels Sales Channels (% of total sales) 70% 66% 60% 50% Sales made directly by Verde’s team increased by 45% 44% in Q1 2023 compared to Q1 2022. 40% 37% 30% This increase in direct sales has partially offset the 30% 19% decline of 80% and 23% in sales volume reported by 20% Distributors and
Slide 17: Loans
Loans Company’s Loan Profile (C$) • In Q1 2023, Verde recorded cash and other 50,000 receivables totaling over $34.3 million, providing 40,000 valuable support for the company's cash flow. This strengthened position enables Verde to fulfill its 30,000 payment obligations in full for debts due in 202
Slide 18: Contingency Plan
Contingency Plan In light of the current market conditions, Verde has been actively implementing cost reduction measures and expense optimization strategies since March 2023. These initiatives have identified various opportunities for savings and cost avoidance, with an estimated total impact of ove
Slide 19: Appendix
Appendix 19
Slide 20: Production costs
Production costs The table below shows a breakdown of Verde’s production costs for BAKS® and K Forte®, and what percentage of those costs is not controllable by management: (+) (+) (=) Projected cost per tonne of Total cost expected Non-controllable costs Cash cost Assets depreciation product for 20
Slide 21: Summary of Interest-Bearing Loans and Borrowings
Summary of Interest-Bearing Loans and Borrowings Part 1: Loan start Grace period Term Loan value Balance at Mar 31, Total interest Lender Purpose Repayable by date (months) (months) (R$’000) 2023 (C$’000) payable* Bradesco Mar, 2023 Capex 6 18 4,729 1,262 Mar, 2025 CDI (1) +4.18% Bradesco Jan, 2023
Slide 22: Summary of Interest-Bearing Loans and Borrowings
Summary of Interest-Bearing Loans and Borrowings Part 2: Loan start Grace period Term Loan value Balance at Mar 31, Total interest Lender Purpose Repayable by date (months) (months) (R$’000) 2023 (C$’000) payable* Brazil Aug, 2022 Working capital 6 18 5,000 1,151 Aug, 2023 CDI (1) +3,00% BDMG Apr, 2
Slide 23: Company Investments ($'000)
Company Investments ($’000) The Company invested over $111 million since its foundation. The investments were mainly in research 41,623 111,238 and development, landing, construction of Plant 1 and Plant 2, equipment, and access improvement. Company Investments ($’000) 35,000 30,000 25,000 20,000 15
Slide 24: Key Metrics Quarterly
Key Metrics Quarterly Sales (Tonnes) Revenue (‘000 CAD) 202,255 200000 189,548 30000 27,269 24,861 153,674 25000 150000 134,000 125,000 20000 111,667 16,837 105,769 108,000 100000 96,233 15000 71,183 11,304 10,851 11,125 10,651 62,895 56,585 10000 50000 32,221 5,376 23,600 20,641 5000 3,956 16,558 3
Slide 25: Earned Growth Rate
Earned Growth Rate Earned Growth Rate (“EGR”) is an accounting-based methodology that provides companies with an objective, data-driven connection between customer success, repeat and expanded purchases, word-of-mouth recommendations, a positive company culture, and business results. It gauges custo
Slide 26: Number of clients per year
Number of clients per year The table below indicates the number of clients who purchased Verde's products annually in Brazil since 2017, along with their total cultivated area. The percentage of the clients’ total purchase potential (in tonnes of Product) that was served by Verde increased from 9.57
Slide 27: Potassium Chloride Replacement
Potassium Chloride Replacement Potassium chloride is composed of approximately 46% of chloride, which can have biocidal effects when excessively applied to soils.¹ Soil microorganisms play a crucial role in agriculture by capturing and storing carbon in the soil, making a significant contribution to
Slide 28: Environmental
Environmental Verde’s production process is sustainable. The processing does not require tailings dams, nor does it generate any waste by products. In sum, the ore recovery rate is 100%. The mined area is mainly composed of degraded pasturelands that, once mined, Verde transforms into tropical fores
Slide 29: Permit Status – Last 12 months
Permit Status – Last 12 months Pit Date Category Status Event 10 March 20, 2023 Mining Applied 400,000 tpy Mining Concession Application 2 November 12, 2022 Environment Applied 22,500,000 Operating Environmental License 9 October 25, 2022 Mining Applied 1,000,000 tpy Mining Concession Application 8
Slide 30: Summary of licenses and permits
Summary of licenses and permits Under Brazilian law, a pit is fully permitted to mine when the Company holds both a Mining Concession/Permit and Environmental License for that area. Verde is fully permitted to mine 2,833,000 million tonnes per year (“Mtpy”) and has submitted concurrent mining and en
Slide 31: Verde's market size according to average KCl CFR Ports price
Verde’s market size according to average KCl CFR Ports price K Forte® has 10% K2O whereas KCl has 60% K2O. Therefore, a farmer in Brazil pays 6 times less per tonne of K Forte® than it pays per tonne of KCl. Verde delivers K Forte® to the farmers for the same price per tonne of K2O than KCl. Verde’s
Slide 32: Brazil's market size projected for 2023
Brazil’s market size projected for 2023 The table below compares K Forte®, potassium chloride and K2O, based on their K2O amount and potential market size. Brazil’s potential market size (million Potassium unit* K2O grade Amount of K2O per tonne of fertilizer tonnes)1 K2O 100% 1,000 kg 7.02 K Forte®
Slide 33: Verde's margin according to average KCl CFR Ports price
Verde’s margin according to average KCl CFR Ports price The table below compares Verde’s and KCl’s prices delivered to the farmer and shows Verde’s potential revenue at each case. (+) (+) (=) Freight cost to KCl price per tonne K Forte® Brazil’s potential market K Forte® production deliver 6 tonnes
Slide 34: KCl CFR Ports delivered to the farmer
KCl CFR Ports delivered to the farmer The table below shows a breakdown of KCl CFR Ports price delivered to the farmer in Brazil. (+) (+) (+) (+) (+) (+) (=) Blender/dealer's Freight from the KCl's price KCl CFR Brazilian Ports Marine brokerage and Demurrage and Storage Freight from the port to Blen
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