Verde Agritech Ltd · TSX:NPK
Verde Agritech — Q2 2023 Earnings Presentation
34 slides from Verde Agritech's earnings presentation, Aug 1, 2023
Slide 1: Q2 2023 Update
Q2 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 (
Slide 3: Buy Super Greensand at Amazon
Buy Super Greensand® at Amazon: 5% OFF Coupon (USA): Q220235OFF 5% OFF Coupon (CA): Sold out The discount codes are valid through August 23, 2023. The codes are limited to a single unit per order and to a single order. TSX: NPK | OTCMKTS: VNPKF 3
Slide 4: Summary
Summary Market Overview .................................................... 05 Q2 2023 Financial Statements ....................... 15 Brazilian Economic Scenario .................................. 07 Operational Summary .................................... 16 Agricultural inputs market and credit
Slide 5: Market Overview
Market Overview The agricultural commodities market has been experiencing significant fluctuations on a downward trend for the last months, impacting the fertilizers’ market worldwide. Soybean price - Paranaguá (R$) Corn price (R$) 200 95 190 90 85 180 80 170 75 160 70 65 150 60 140 55 130 50 01/02/
Slide 6: Market Overview
Market Overview Coffee Price (R$) Cotton Price (R$) 1500 1400 800 1300 700 1200 600 1100 500 1000 900 400 800 300 14/10/2022 01/04/2022 26/04/2022 17/05/2022 07/06/2022 29/06/2022 20/07/2022 10/08/2022 31/08/2022 22/09/2022 07/11/2022 29/11/2022 20/12/2022 11/01/2023 01/02/2023 24/02/2023 17/03/2023
Slide 7: Brazilian Economic Scenario
Brazilian Economic Scenario Brazilian SELIC interest rate at year end • On August 5, 2023, the Central Bank of Brazil lowered the 13.75% 14.00% 13.25% SELIC rate from 13.75% to 13.25% after a sequence of 12 11.75% 12.00% consecutive rate hikes, commencing in March 2021. 10.00% 9.25% 9.00% 8.50% • Th
Slide 8: Agricultural inputs market and credit crunch
Agricultural inputs market and credit crunch The convergence of these factors characterizes the current scenario as an atypical and extreme circumstance. Farmers need to Prices of commodities Many farmers in Brazil But they have a Prices continue to Crops are due to be acquire inputs for the initiat
Slide 9: Agricultural inputs market and credit crunch
Agricultural inputs market and credit crunch In addition to the forecast of a record harvest in Brazil, the decline in grain prices has prompted Brazilian farmers to suspend sales, causing a backlog in product distribution. In the state of Mato Grosso, the country's largest soybean producer, over 20
Slide 10: Global Market Competition and Financing
Global Market Competition and Financing Unlike its competitors, Verde does not have the option to incur most of its cost of debt in US dollar-denominated liabilities. Overall, the Company is not able to provide financing for more than 20% of its revenue due to constraints related to lines of credit.
Slide 11: Market Overview
Market Overview The price of potassium chloride (KCl) has exhibited a consistent downward trend since H2 2022. The Average KCl CFR declined by 67% in Q2 2023, compared to Q2 2022, with a sharp 40% decrease from January to July 2023. 1 KCl CFR Brasil average spot price (US$) 1400 1200 1000 800 600 40
Slide 12: Currency exchange
USD/BRL Exchange Rate Currency exchange 5.60 5.40 As the US dollar weakened by 10% against 5.20 5.04 5.02 the Brazilian Real during the year, Verde's 5.00 4.96 4.98 sales revenue, priced based on potassium 4.85 4.80 4.76 chloride, suffered a decline when converted to Brazilian Real. 4.60 4.40 Canadi
Slide 13: Market outlook
Market outlook The agricultural market is showing early signs of recovery: • Agricultural commodity prices are no longer experiencing a rapid decline. • Interest rates in Brazil have started to decrease from their elevated levels. • Projections indicate a positive outlook for inflation control and s
Slide 14: Q2 2023 Highlights
Q2 2023 Highlights Cash Cash and other receivables held by the Company in Q2 2023 were $23.8M, compared to $22.1M in Q2 2022. Cash utilised from investing activities decreased by 97% in Q2 2023, to $329k compared to $12,480,000 in Q2 2022 as costs relating to the commissioning and construction of Pl
Slide 15: Q2 2023 Financial Statements
Q2 2023 Financial Statements All amounts in CAD $’000 Q2 2023 Q2 2022 %Δ 2023 YTD 2022 YTD %Δ Revenue 10,305 24,861 (59%) 21,430 36,165 (41%) Production costs(1) (1,914) (5,332) (64%) (4,623) (7,987) (42%) Gross Profit 8,391 19,529 (57%) 16,807 28,178 (40%) Gross Margin 81% 79% N/A 78% 78% N/A Sales
Slide 16: Operational Summary
Operational Summary All amounts in CAD, except percentages Q2 2023 Q2 2022 %Δ 2023 YTD 2022 YTD %Δ Tonnes sold ‘000 107 202 (47%) 215 314 (31%) Average Revenue per tonne sold $ er tonne sold $ 96 123 (22%) 99 115 (14%) Average Production cost per tonne sold $ (18) (26) (32%) (21) (25) (16%) Average
Slide 17: Sales, General and Administrative Expenses
Sales, General and Administrative Expenses All amounts in CAD $’000, except percentages Q2 2023 Q2 2022 %Δ 2023 YTD 2022 YTD %Δ Sales Expenses Sales and marketing expenses (1,030) (711) 45% (2,100) (1,533) 37% Fees paid to sales agents (94) (359) (74%) (231) (495) (53%) Product delivery freight expe
Slide 18: Logistics
Logistics Sales Channels (% of total sales) FOB vs CIF (tonnes) 250,000 70% 59% 202,255 60% 53% 200,000 50% 150,000 137,533 40% 37% 32% 107,816 30% 100,000 73,348 64,722 20% 50,000 34,468 9% 9% 10% 0 0% Q2 2023 Q2 2022 Q2 2023 Q2 2022 FOB CIF Total Direct Sales Sales Agents Distributors The sales ch
Slide 19: 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 Q2 2023 119,809 Q1 2023 29,648 - 2018 2019 2020 2021 2022 2023 PFS 10Mtpy PFS 23Mtpy PFS 50Mtpy 1 – Targeted range
Slide 20: Loans
Loans Company Loans Profile • In Q2 2023, Verde recorded cash and trade receivables Loans remaninig at the end of each quarter Loan Payments totaling over $23.8 million, providing valuable support 40,000 for the company's cash flow. 35,000 30,000 This strengthened position enables Verde to fulfill i
Slide 21: Appendix
Appendix 21
Slide 22: Production costs
Production costs The table below shows a breakdown of Verde’s production costs for BAKS® and K Forte®, and what percentage of those costs is not controllable by management: (+) (+) (=) Projected cost per tonne of Total cost expected Non-controllable costs Cash cost Assets depreciation product for 20
Slide 23: Company Investments ($'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: 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 25: 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 26: Potassium Chloride Replacement
Potassium Chloride Replacement • Potassium chloride (KCl) is the conventional source of potassium, produced mostly in Canada, Russia, and Belarus. Brazil is highly dependent on imported KCl, accounting for over 96% of the total potassium used in the country's crops. • Despite its effectiveness as a
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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
Slide 34: TSX: NPK | OTCMKTS: VNPKF
TSX: NPK | OTCMKTS: VNPKF investor.verde.ag 34