Vittia Fertilizantes e Biológicos S A : Dados Econômico-Financeiros

EARNINGS RELEASE

4Q22 and 2022

(Earnings Release / 4Q22 and 2022)

São Joaquim da Barra, March 16, 2023. Vittia Fertilizantes e Biológicos S.A. (VITT3: BZ) ("Vittia" or "Company"), a Brazilian company specialized in biotechnology (biopesticides and inoculants) and special plant nutrition with solutions for several crops, announces its results for the fourth quarter of 2022 ("4Q22") and fiscal year ended December 31, 2022 ("2022").

4Q22 and 2022 Highlights

Gross revenue from the biological segment reached R$ 71.9 million in 4Q22 (+25.4% vs. 4Q21) and R$ 225.5 million in 2022 (+36.1% vs. 2021), with the biopesticides line recording R$ 52.8 million in 4Q22 (+34.0% vs. 4Q21) and R$ 151.2 million in 2022 (+41.8% vs. 2021).

Net revenue totaled R$ 230.2 million in 4Q22 (-15.1% vs. 4Q21) and

R$ 851.2 million in 2022 (+9.3% vs. 2021).

Adjusted EBITDA totaled R$ 59.9 million in 4Q22 (-0.3% vs. 4Q21) and R$ 217.9 million in 2022 (+23.8% vs. 2021).

Net income totaled R$ 49.3 million in 4Q22 (+15.2% vs. 4Q21) and R$ 147.5 million in 2022 (+36.9% vs. 2021).

Capex of R$ 11.5 million in 4Q22 (-10.2% vs. 4Q21) and

R$ 61.3 million in 2022 (+17.6% vs. 2021)

Our Business

We operate in four product divisions, which are our reportable segments: Foliar Fertilizers and Industrial Products; Micronutrient Fertilizers; Soil Conditioners and Organomineral Fertilizers; and Biological Products. These divisions have centralized management under the same corporate division, including the Board of Directors and Advisory Committees, Executive Board, Control and Operating Systems, and Technology and People, among others. We have specialized and capable teams to provide high-quality and unique products to continuously meet market demand and are focused on superior productivity and financial performance under the ESG matrix.

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Message from Management

Over 2022, we continued focusing on strengthening our commercial relationship with rural producers, resellers, and cooperatives, enhancing our production and logistics processes, and fine-tuning our financial discipline and internal controls, thus sustainably increasing our results.

From an accounting and financial perspective, we recorded growth across all our key balance sheet lines. Compared to the same quarter of the previous year, the Company's net revenue reached R$230.2 million (-15.1% vs. 4Q21), adjusted EBITDA was R$59.9 million (-0.3% vs. 4Q21), and net income totaled R$49.3 million (+15.2% vs. 4Q21). The fourth quarter of the year showed greater conservatism on the part of the producer in relation to investments in inputs due to the Brazilian electoral process and also because the period of climatic instability in some regions that had a prolonged dry period right after the planting of the summer crop. Even considering a more adverse scenario in relation to demand, we still had a gross revenue growth of 34.0% in the biological pesticides line, one of our focus of investments and commercial effort. Our biologicals segment, which includes, in addition to biological pesticides, inoculants (biological fertilizers), grew 24.5% in net revenue, representing 27.3% of the total for 4Q22 (+8.7 p.p. vs. 4Q21). Thus, due to the performance in the biologics segment, despite the drop in consolidated revenues, the Company was able to deliver adjusted EBITDA practically stable in relation to the same period of the previous year and growth in net income.

In 2022, Vittia grew in all lines, closing the year with net revenue of R$851.2 million (+9.3% vs. 2021), adjusted EBITDA of R$217.9 million (+ 23.8% vs. 2021) and net income of R$147.5 million (+36.9% vs. 2021).

Over 2022, the company observed the increasing adoption of sustainable practices by farmers which, in line with certain turmoil in the traditional agricultural input market, increased the experimentation and use of biological products, both those already existing and consolidated in the portfolio and new products, such as Meli-X Turbo, launched in 1Q22. This scenario, which values Vittia's investment strategy in innovation and R&DI, strengthens the dissemination of our products and services and aligns our actions with a vision based on the medium and long terms.

Despite the good financial results presented in the period, it is important to point out that Brazilian agriculture, and in particular the market for agricultural inputs, experienced significant challenges throughout the year. The armed conflict between Russia and Ukraine, which remains without a definitive outcome, had a significant impact on the agricultural inputs segment. The possibility of a shortage of basic fertilizers (NPK), which greatly impacts the segment of soil conditioners and organominerals, generated strong price volatility and a mismatch between supply and demand in different periods of the year. If initially the industry sought to guarantee the maximum possible supply in the international market, while producers worked to reduce their use in crops, with the fading of this scarcity perspective, we had a strong influx of fertilizers in Brazil, impacting cost and price structures and the timing of the sale of these products.

Furthermore, we had a crop failure in the country's Southern region, caused by La Niña, which directly impacted the productivity of traditional crops, notably soybeans. But given the region's low share in Vittia's total sales, the lower sale in the region did not significantly impact the Company's consolidated results. The election scenario in Brazil was another challenging event for farmers' purchase decisions for the 2022/2023 crop year. The uncertainties regarding the policies to be implemented by the new government, and how they impact agribusiness, resulted in more conservative actions in terms of purchase decisions at the beginning of 4Q22.

However, despite these remaining challenges, the Company has a favorable view of the current crop. With appropriate weather conditions, soybean planting beginning at an accelerated pace, and agricultural prices in international markets remaining at good levels, we have a perspective of closing the summer harvest with good profitability for rural producers.

At the beginning of 2023, Vittia acquired Agro21, a company that provides precision agriculture services focused on the release of macrobiological agents through drones, strengthening its position in the segment and starting to offer farmers application services, generating a greater perception of value for customers.

We remain confident in the expansion of our business and continue to strengthen our commercial network, increasing our investments in R&D, industrial structure, and human capital.

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Economic and Financial Performance
In thousands of R$	4Q22	4Q21	Chg. (%)	2022	2021	Chg. (%)
Net revenue	230,183	271,278	(15.1%)	851,191	778,915	9.3%
Cost of goods sold	(139,320)	(176,631)	(21.1%)	(524,720)	(494,712)	6.1%
Gross profit	90,863	94,647	(4.0%)	326,471	284,203	14.9%
Gross margin	39.5%	34.9%	4.6 p.p.	38.4%	36.5%	1.9 p.p.
Operating Expenses	(43,560)	(44,274)	(1.6%)	(145,203)	(141,364)	2.7%
Operating profit (loss)	47,303	50,373	(6.1%)	181,268	142,839	26.9%
Adjusted EBITDA	59,910	60,072	(0.3%)	271,896	176,069	23.8%
Adjusted EBITDA margin	26.0%	22.1%	3.9 p.p.	25.6%	22.6%	3.0 p.p.
Net financial result	(2,004)	(3,383)	(40.8%)	(10,787)	(10,486)	2.9%
Income tax and social contribution	3,965	(4,236)	N/A	(22,996)	(24,614)	(6.6%)
Net result	49,264	42,755	15.2%	147,485	107,740	36.9%
Net margin	21.4%	15.8%	5.6 p.p.	17.3%	13.8%	3.5 p.p.
Investments (fixed and intangible assets)	11,478	12,783	(10.2%)	61,315	52,132	17.6%

Operating income

Vittia's revenues mainly derive from the following product lines:

Gross revenue by product line

	In thousands of R$	4Q22	4Q21	Chg. (%)	2022	2021	Chg. (%)
	Foliar fertilizers	123,947	113,762	9.0%	411,852	333,661	23.4%

Micronutrient fertilizers	23,534	47,265	(50.2%)	141,875	150,533	(5.8%)
Industrial Products and Other	17,826	25,935	(31.3%)	70,708	75,875	(6.8%)
Biopesticides	52,760	39,381	34.0%	151,200	106,633	41.8%
Inoculants	19,098	17,919	6.6%	74,338	59,085	25.8%
Soil conditioners and organomineral	18,297	55,162	(66.8%)	95,108	132,214	(28.1%)
fertilizers
Gross revenue	255,462	299,424	(14.7%)	945,081	858,001	10.1%

For the purposes of segment reporting, whose operating results are regularly revised by management (reportable segments), the biopesticide and inoculant lines are consolidated under the "Biological products" segment, while the "Industrial products and other" line is consolidated together with the foliar fertilizer line under the "Foliar fertilizer and industrial products" segment. Net revenue totaled R$ 230.2 million in 4Q22 (-15.1% vs. 4Q21), mainly due to decreases in soil conditioners and organomineral fertilizers lines (-67.6% vs. 4Q21) and soil micros (-49.8% vs. 4Q21), and, in 2022, it came to R$ 851.2 million (+9.3% vs. 2021), mainly due to growths in the biological products line (+36.7% vs. 2021) and foliar fertilizers and industrial products (+16.8% vs. 2021).

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Net operating income by segment

	In thousands of R$			4Q22			4Q21		Chg. (%)			2022				2021			Chg. (%)
	Foliar fertilizers and industrial products	129,774		127,482	1.8%		439,174		376,087			16.8%
	Micronutrient fertilizers	20,898		41,668	(49.8%)		125,850		131,992			(4.7%)
	Biological products	62,735		50,381	24.5%		199,688		146,051			36.7%
	Soil conditioners and organomineral	16,776		51,747	(67.6%)		86,479		124,785			(30.7%)
	fertilizers
	Net revenue			230,183			271,278		(15.1%)			851,191				778,915			9.3%

Geographic breakdown

Vittia is present throughout Brazil and abroad, with revenue broken down as follows:

Net revenue breakdown (R$ million)

185	147	138	151	131	149	105	85	97	65	32	26	26	28	25	19	20	28	15	23	6	6	71	52
	SP	MG	MT	GO	BA			PR		MS	MA	RS	ES	EX	Other
														2022		2021									States

Gross profit and gross margin

	In thousands of R$			4Q22			4Q21		Chg. (%)			2022				2021			Chg. (%)
	Foliar fertilizers and industrial products	38,127	44,491		(14.3%)		148,041		132,467			11.8%
	Gross margin	29.4%		34.9%		-5.5 p.p.		33.7%	35.2%		-1.5 p.p.
	Micronutrient fertilizers	2,605		2,027		28.5%		20,041		10,485		91.1%
	Gross margin	12.5%		4.9%		7.6 p.p.		15.9%	7.9%		8.0 p.p.
	Biological products	49,457		39,914		23.9%		155,155		115,619			34.2%
	Gross margin	78.8%		79.2%		-0.4 p.p.		77.7%	79.2%		-1.5 p.p.
	Soil conditioners and organomineral	672		8,216		(91.8%)		3,233	25,632		(87.4%)
	fertilizers
	Gross margin	4.0%		15.9%		-11.9 p.p.		3.7%	20.5%		-16.8 p.p.
	Gross profit			90,863			94,647		(4.0%)			326,471				284,203			14.9%
	Gross margin			39.5%			34.9%		4.6 p.p.			38.4%			36.5%			1.9 p.p.

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