Adecoagro SA (AGRO) 2022 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's First Quarter 2022 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; and Mr. Charlie Boero Hughes, CFO. We would like to inform you that this event is being recorded. (Operator Instructions)

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward-looking statements.

Now I'll turn the call over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning and thank you for joining Adecoagro's 2022 First Quarter Results Conference. First, and before going into the results of our operations during the quarter, I would like to mention that the last month, our Annual Shareholder Meeting approved a cash dividend distribution of $35 million in 2 installments. That is approximately $0.32 per share. This is a new milestone that Adecoagro has achieved. And in a couple of days and for the first time in our history, we will be making the payment of the dividend's first installment in the amount of $17.5 million. At the same time, we continue buying shares under our buyback program and in line with our distribution policy.

Now getting into the highlights of the quarter, I would like to start with the Sugar, Ethanol and Energy business. The first quarter is always the most variable in terms of how much cane is crushed, depending on weather conditions and cane availability. As we had anticipated in our past conferences, we took advantage of less availability of cane and decided not to crush cane all year round and made a short interharvest period that finished in mid-March and performed maintenance tasks. As a result, production during the quarter was slow. However, our sales and EBITDA generation stood at solid levels. We were well positioned to profit from the attractive prices, especially of ethanol, thanks to our strategy to carry forward our inventories for this time of the year.

We ended the first quarter with tanks full of ethanol and captured spectacular prices at the beginning of the second quarter. In April, we sold all of our remaining ethanol inventories and our daily production at an average price of $0.264 per pound of sugar equivalent. That means 35% higher than the price of sugar. With this sale, we marked a new record of 125,000 cubic meters in only 1 month.

In addition, maximizing ethanol production allows us to generate more carbon credits. The sale of CBios have become a relevant part of our revenues. Since the beginning of 2022, we sold $5 million and expect to make up to $20 million at the end of the year, only for the sale of carbon credits.

To conclude this segment, I would like to highlight that results achieved were in line with our expectation, considering weather events. Our crushing forecast for the rest of the year remains unchanged. Good range in March and April have improved our productivity outlook, and we are confident we will continue to take advantage of the price scenario, thanks to our open sugar position strategy and our asset flexibility to switch from producing sugar to ethanol and from hydrous to anhydrous as needed.

Moving to our Farming and Land Transformation business. We are currently undergoing the harvesting activities for the 2021-2022 agriculture campaign with yields in line with our forecast. And we are designing our planting plan for the next crop season. Due to the seasonality of agricultural activities and cash generation, we analyze our operation on an annual basis rather than by quarter. And on this annual basis, we expect our operations to achieve results in line with last year.

For example, in our Crop business, despite of the increasing cost, price for the products we produce are very attractive, and we are well positioned to capture them. We expect this to drive an increase in EBITDA generation. In our Dairy business, the increase will drive by our growing production of high-quality milk, which we transform into value-added products demanded in domestic and export markets. In our Rice business, we expect a small reduction in our EBITDA as yields achieved were lower than record high levels achieved last year. And in addition, rice prices have not yet copied the increased experience by the other commodities.

In this sense, and in order to mitigate weather risk, which is a risk that is part of our business, we have expanded our rice production business into Uruguay with the recent acquisition of Viterra's rice operation. The transaction will not only provide weather diversification, but bring commercial benefits, thanks to the optimized quality of Uruguayan rice as well as logistic advantages.

I would summarize saying that we are in an excellent position to benefit from the current context and continue providing the world with high-quality food and renewable energy at a competitive cost. The natural advantages of the regions where we operate allows us to produce more with less. And on top of this, our sustainable production model allows us to recycle byproducts such as vinasse or manure and transform them into biofertilizers used in our own operations. At the time of scarcity of inputs, we are well positioned to mitigate the overall increase in production costs while also being efficient from an operational and environmental point of view.

To conclude, I want to reiterate my gratitude to all our employees, contractors and stakeholders for their hard work and commitment. I am proud of the company we are building together over the past 20 years and excited about the opportunities ahead.

Thank you, Mariano. Good morning, everyone. Let's start on Page 4 with a brief analysis on the rains in Mato Grosso do Sul. As seen on the top tables, rains in our cluster during the first 3 months of the year were 31.3% lower than during the same period of last year and 18.6% below the 10-year average. Nevertheless, rainfalls during March and April were above average, favoring the recovery of our sugar implantation. Our cluster in Mato Grosso do Sul normally operates based on a continuous harvest model. This means that subject to weather going normal, we can harvest and crush cane year round, even during the first quarter of the year, which is the traditional interharvest period of Brazil's sugar and ethanol industry.

As we already knew and had anticipated in several opportunities, the adverse weather conditions observed in 2021 caused a reduction in sugarcane availability towards year-end and beginning of 2022. As a result, in December 2021, we entered into an interharvest period until mid-March 2022 when we resumed activities. Thus, our crushing volumes decreased 86.9% year-over-year, reaching 272,000 tons. All of our hectares have already implanted and will be harvested at a later date to allow them to further recover. We expect to make up for the slow start in the following quarters and reach a crushing volume in line with last year.

Please jump to Page 5, where I would like to walk you through our agricultural productivity. As we were expecting during the first 3 months of the year, yields were down 40.9% year-over-year reaching 44 tons per hectare, whereas TRS per ton decreased 11% to 100 kilograms per ton. As a result, TRS production per hectare was 47.4% lower than last year. This decline is fully related to the fact that we focus on harvesting reform areas with limited growth potential mainly related to the fifth cut and above. By doing this, we were able to produce ethanol and capture attractive prices while allowing areas with greater potential to continue to grow and liberating area to plant new high-yielding cane, which will be harvested next season.

Before turning to the following slide, it is important to highlight that the results achieved are not a reflection of our expectations for the full year. We have a positive outlook in terms of cane availability and productivity, favored by good rains in March and April. This will allow us to increase our crushing pace and continue to take advantage of the constructive price scenario.

Let's move ahead to Slide 6, where I would like to discuss our production mix. In the first quarter of 2022, both hydrous and anhydrous ethanol traded at an average price of $0.191 and $0.208 per pound sugar equivalent, marking a 3.2% and 12.5% premium to sugar, respectively. Thus, we diverted 97% of our TRS to ethanol to profit from higher relative prices. Out of our total ethanol production, 49% was anhydrous ethanol compared to 11% during the same period of last year. This high degree in flexibility constitutes one of our most important competitive advantages since it allow us to make a more efficient use of our fixed assets and profit from higher energy prices.

The decline in sugar and ethanol production due to lower crushing was offset by higher average selling prices. We were able to capture the increasing prices, thanks to our beginning of period inventories, which were 56% higher than in the first quarter of 2021 in the case of the ethanol and 75% in the case of sugar. To conclude with this slide, ethanol accounted for 65.7% of total adjusted EBITDA generation in Sugar, Ethanol and Energy business considering other operating income, while sugar accounted for 33.5% during the first quarter of the year.

Let's please turn to Slide 7, where I would like to discuss our sales throughout the quarter. As you can see on the right chart, net ethanol sales for the quarter amounted to $57 million, marking a 31.1% increase year-over-year on higher average selling prices, mainly led by anhydrous ethanol. It's worth to point out that attractive prices for ethanol during the quarter were driven by the late start of harvesting activities in the Center-South of Brazil, the hike in international oil prices and a greater-than-expected rebound in hydrous ethanol consumption in March compared to February.

Despite the year-over-year reduction in ethanol production, we were able to benefit from the price scenario due to our commercial strategy to push forward sales and high inventories. At the start of 2022, we had a carryover of 93,000 cubic meters of anhydrous ethanol and 61,000 cubic meters of hydrous ethanol. Half of these inventories were sold in the first quarter of 2022, while the other 50% were sold during April, along with our monthly production. That being said, sales in April marked a new record high for ethanol amounting to 125,000 cubic meters at an average price of $0.264 per pound in sugar equivalent, including 10,000 cubic meters exported.

A brief comment on CBios. Due to the efficiency and sustainability in our operations, ranked among the highest in the industry, we have the right to issue carbon credits every time we sell ethanol. During the first quarter of the year, we sold $2 million worth of CBios under the RenovaBio program. In the case of energy, net sales amounted to $2 million, marking a 53.6% year-over-year decrease. This was fully attributable to a 45.7% decline in average selling volumes, along with a 14.5% decrease in average selling prices on higher levels of water in reservoirs.

Lastly, net sales of sugar during the quarter declined 69.1% year-over-year to $8 million. This was driven by a 72.5% decrease in selling volumes due to the lower production partially offset by a 12.4% increase in average prices, which reached $0.205 per pound. Nevertheless, we believe we are in a good position to continue capture the increasing prices as we still have unhedged 62% of sugar and 95% of ethanol production related to the '22/'23 campaign.

Finally, to conclude with the Sugar, Ethanol and Energy business, please turn to Slide 8, where I would like to discuss the financial performance. Despite the late start of harvesting activities and thus, the lower production, adjusted EBITDA during the first quarter was $57 million, in line with last year. These solid results were mainly driven by a $10 million gain in the mark-to-market of our sugarcane, along with a $6 million in gain in the mark-to-market of our commodity hedge position. Nevertheless, results were impacted by an increase in costs, mostly driven by fertilizers, fuels and lubricants, coupled with an appreciation of the Brazilian currency as well as lower sales registered.

I would now like to move on to the Farming business. Please direct your attention to Slide 10. We have completed our campaign activities for the 2021 and '22 campaign in which we have planted a total of 281,000 hectares, marking a 7.4% increase in area compared to the previous season. Soybean, sunflower and cotton were the crops with the largest increase in planted area. We are currently undergoing harvesting activities for most of our grains. As of the end of April of 2022, we harvested 146,000 hectares or 52% of total area and produced over 600,000 tons of aggregate grains.

Let's move to Page 11, where I would like to walk you through the financial performance of our Farming and Land Transformation businesses. Adjusted EBITDA in the Farming and Land Transformation businesses amounted to $36 million for the first quarter, 36.6% below the same period of last year. The decline is fully explained by a lower contribution from our Rice business into the overall results.

Adjusted EBITDA in our Rice business reached $8 million, marking a 70.9% decrease compared to the same period of last year. The decline is mainly explained by lower yields due to the impact of La Niña in some of our farms, which reduced water availability, and by an 8% year-over-year decline in prices at the moment of harvest. In addition, higher costs due to inflation in Argentina and U.S. dollars also negatively impacted results. By expanding our Rice business into Uruguay, we believe geographic diversification will enable us to mitigate weather risks.

Going into our Crop business, adjusted EBITDA amounted to $18 million, marking a 3.2% year-over-year increase. The main drivers were an $8 million increase in gross sales and a $12 million year-over-year gain related to the mark-to-market of our biological assets due to the higher planted area and better prices. Results were partially offset by a loss in the mark-to-market of our commodity hedge position and inflation in U.S. dollar terms, which drove costs and expenses.

Moving on to the Dairy business. Adjusted EBITDA marked a year-over-year increase of 48% to $7 million. Higher results were explained by an increase in both volume and average prices and our continuous focus on achieving efficiencies in our vertically integrated operations. Again, results were partially offset by higher costs due to inflation in U.S. dollar terms and higher cost of feed due to higher prices of corn and soybean.

In the case of Land Transformation, although no farm sales were conducted, the positive results reflects the mark-to-market of an accounted receivable corresponding to the latest sale of farms in Brazil, which tracks the evolution of soybean prices.

Let's now turn to Page 13, which shows the evolution of Adecoagro's consolidated operational and financial performance. Our gross sales expanded 17.6% year-over-year to $205 million, whereas our adjusted EBITDA amounted to $86 million, marking a 20.8% decline compared to the same period of last year. It is worth to highlight that despite weather challenges, we were able to capture high prices, thanks to our commercial strategy to carry over stocks. As mentioned before, we expect it to make up for the lower production volume in the following quarters and continue to benefit from attractive prices.

Lastly, the functional currencies in the regions where we operate may experience changes compared to the U.S. dollar, which is our reporting currency, consequently causing an impact on our FX gain losses line with our P&L. During the first 3 months of this year, both of our functional currencies appreciated in real terms, especially the Brazilian real, causing a decrease in our debt level in local currency, and hence, again, in our net income that is later neutralized in our adjusted net income bridge construction. For more details on the matter, please refer to Page 3 of our first quarter 2022 earnings release.

To conclude, please turn to Slide 14 to take a look at our net debt position. As March 31, 2022, net debt amounted to $788 million, $170 million or 27.5% higher compared to the fourth quarter of 2021. This was fully explained by a 13.8% increase in gross debt, along with a 28.5% reduction in our cash position. The first semester has the highest working capital and CapEx requirements as we perform most of our maintenance in the sugarcane industry and our crops are planted. Whereas in the second semester, we collect all the cash generated by the sales of our products. Thus, it is important to highlight that our operations should be analyzed annually rather than by quarter, given the seasonality of our cash generation. We expect to reduce the working capital requirements and our indebtedness as we continue with our harvesting activities throughout the second and third quarter.

On a year-over-year basis, net debt increased by 7.6%. This is mostly explained by an increase in marketable inventories of $45 million compared to the first quarter of 2021, led by higher prices and higher carryover stock, especially soybean and corn. We believe that our balance sheet is in a healthy position not only based on the adequate overall debt levels, but also on the term of our indebtedness, most of which is long-term debt. Our net debt ratio went up to 1.9x in this quarter compared to the 1.4x in the previous quarter, whereas it remained flattish versus the first quarter of 2021.

At the same time, our liquidity ratio, which is calculated as cash and equivalents plus marketable inventories divided by short-term debt, reached 1.5x. This clearly shows the full capacity of the company to repay short-term debt with cash balance without raising external capital.

Thank you very much for your time. We are now open to questions.

(Operator Instructions) And our first question today comes from Guilherme Palhares from Bank of America.

Two questions from our side actually, the first one in the sugar and ethanol business. Just trying to understand a bit the strategy in terms of the crushing of the season. So what do you expect in terms of the balance of sugar and ethanol given that the company focused mostly on ethanol in this first quarter?

And the second question is regarding the cost for the Farming business into 2022 and 2023 season. What do you expect looking at the current fertilizer prices and the inflation that we are seeing in terms of both labor and other items like diesel and [fuel] now?

Thank you for your question. I'm going to ask Renato to answer the first part of your question regarding sugar and ethanol, and then I'm going to take the one in Farming and Land Transformation.

Thank you for your question. We remain very positive for both price of sugar and ethanol. We think that the total TRS produced by Brazil is not going to increase compared to last year. So we think that there is going to be a lot of competition between sugar and ethanol for the same TRS in the sugarcane. So it gives a lot of support for both products. So it's not clear in the Center-South of Brazil which mix the mills will decide to prioritize.

In our case, I think it's a little bit different because we are in Mato Grosso do Sul that we have the tax rebate -- ICMS tax rebates, which gives us an advantage to produce ethanol. It already happened in the first quarter that we produce 97% of ethanol, just 3% -- just to multiply the yields to start the season. And we think that we will keep maximizing ethanol, and that's one of the reasons that we are flexible in terms of hedging, to give us possibility to keep prioritizing the products which are -- which is more profitable.

Thank you, Renato. And then going into the second part of your question regarding the cost of -- the total cost of Farming and Land Transformation, I would like to specifically mention that we are producing this in the areas where worldwide are more efficient. So within our sustainable production model, we are using very small amounts of inputs regarding what we are producing. And that's part of the essence of our strategy since we started with this. So that's why there is an increase in prices that you can see of 100% or even more than 100% in the last 2 years in fertilizers or some of the ag inputs like herbicides.

And in our particular case, because of using really small amount on producing in our systems is that we have an overall increase and where I'm including the herbicides, fertilizers and diesel of around 20% from '21 to '22 campaign. And when we think on '22 campaign to '23 campaign, that is a campaign that we are preparing now, there, we are estimating another 15% increase. So going to the -- answer specifically your question, I would say, 20% or around 20% on '22, 15% more in '23. And those are the overall costs.

When we look at the prices of our different products or the different commodities or products that we are producing, that increase depends on each one of the products, but is way higher than these increasing costs. The only exception that we pointed out in the presentation is with the rice, where the increasing prices have not yet occurred. We are very confident that this price is already increasing and will continue to increase because it follows the other commodities, but it takes some time to follow the rest of the commodities.

Our next question comes from Thiago Duarte from Banco BTG Pactual.

I have one question, I think, to Renato on the Sugar, Ethanol and Energy business. Just trying to build up the -- you expect the same amount of cane crushing this year versus last year, but just trying to build up on how that should take place in terms of harvested area and yields, right? Because last year, you guys managed to maintain the crushing volume in spite of lower yields because you had a much higher -- a much larger harvested area. So just wondering how you see the area versus yields playing out this year so that you can reach the same roughly 11 million tons of cane this year.

Thank you for your question. Renato, do you want to address the answer?

Yes. Thank you for the question. We think that the yields this year is going to be approximately between 5% and 7% higher than last year. This is going to change a lot during the year. As we mentioned here, the first quarter yields were very low because we prioritized areas that has to be replanted. 80% of the areas harvest in the first quarter was more than fifth and sixth cuts. And we think that the sugarcane is going to improve a lot in the second semester because we are not going to have any residual impact from the frost of last year. So we think that we are going to speed up the pace.

And just to complement, we had very good rains in March and April, which will help the yields for next year and -- sorry, for the next -- for the second semester. And also the -- we have planted a lot of sugarcane that is going to be harvest in the second semester. So there's going to be a lot of difference between the yields in the first and the second semester.

Now we think that we are going to have a challenge to crush the whole sugarcane because we have started the campaign later on. So crushing is going to be a very -- a key point in the second semester, but we feel comfortable that we're going to achieve a crushing slightly higher than last year, especially in the third and fourth Q because we are going to take part of the harvester that we use in the planting operation to help to supply more sugarcane to the mill. So we think that we're going to achieve a total crushing slightly higher than last year.

And if I may, I have a follow-up question on that. How you see your costs playing out this year? Because I understand that this better yields is going to be very positive in terms of diluting your costs. At the same time, there is this cost inflation across the whole industry. So if you could comment a little bit on how you see your unitary cost or cost per ton or per hectare playing out this year, will be nice as well.

Yes. I think that the big increase in costs happened from '20 to '21 harvest. Actually, we had an increase in costs of approximately 40%. For this year, we think that the cost is going to increase around 10%, which is basically the inflation that we have in Brazil. I'm talking in cost in reais, not considering the effect of the exchange rate. And of course, the improve in yields is helping to dilute those costs that we are considering.

I think fertilizer, we are in a very good position because we are producing a lot of biofertilizer. Actually, [48%] of our fertilizer needs is produced with our own products. So we are basically self-sufficient in potash. It's a big problem in Brazil today. So we are comfortable that we are going to have a cost, approximately 10% -- the increase in cost is going to be only 10%, aligned with inflation.

Our next question comes from Lucas Ferreira from JPMorgan.

First question maybe to Renato as well. So if you can talk about -- is to [preopen] in terms of hedges, especially for sugar. What's your outlook there? Should you think you should be speeding up hedging a little bit? India coming with a very large crop ahead. So are you still comfortable to keep hedges at these levels? Or you guys should be speeding up a little bit the hedging? What's the -- can you discuss a little bit of this commercial strategy for both ethanol and sugar, if you can?

And the second question, more overall to probably, Charlie, if you can discuss the CapEx expectation for the full year for both sugar and ethanol and crops. How much are you guys expected to spend both in terms of maintenance and expansion CapEx for this year?

Okay. Thank you, Lucas. Renato, do you want to answer the first part of the question?

Yes. Thank you for your question, Lucas. As I said before, I think we -- it's going to have a very good competition between sugar and ethanol for the same TRS of the sugarcane. So we are positive that both products will be in a positive scenario. We want to maintain very flexible, to use our flexibility as better as possible. I think during the first Q, we showed how our flexibility can help. We produced 97% of ethanol.

Regarding India, that you mentioned, I think everyone is already expecting India exporting 9 million tons of sugar. And even in this scenario, Brazil has to produce 32 million tons of sugar in order to the market to be on balance. And we think this competition that I mentioned between sugar and ethanol, there is a big risk that Brazil is going to produce less than 32 million tons of sugar. So we think that the scenario is very positive. And since the scenario is very positive, we want to be flexible to maximize the product which is more profitable.

And in addition, we have a price floor in ethanol because we are able to export ethanol to Europe. We are one of the few mills in Brazil that can export ethanol to Europe because we have the Bonsucro certification and a -- 20% of our production. And also we have (inaudible), which is the equipment that produces anhydrous ethanol. It is very efficient and can produce a very high and high dose ethanol degree, which is required by the European market. It gives a floor on price close to -- current price close to $0.22 per pound.

Thank you, Renato. Lucas, regarding the expectation for CapEx and maintenance CapEx, I would start saying that today, our priority is complying with our distribution policy. As you know, we have this 40% of the net cash flow from operation, that is $152 million. So at least, we are going to distribute that, $35 million in dividends and the rest in buybacks. So within that priority in mind is that, of course, we continue with our ongoing growth projects that are this organic growth that is happening in the sugar and ethanol with the planting, and we are planting new hectares, and that is what is mainly driving our growth CapEx.

And that will continue depending on the area that we are available or we have the ability to lease and plant. So that will drive the expansion growth on top of some small investment in different parts of the operation that generates very good synergies. And thus, returns, all of them above 25% IRR as an example.

And then whether we can expect higher or lower maintenance CapEx and expansion CapEx, on the maintenance CapEx, it depends also on the FX and that cost. So in general, the maintenance CapEx will continue in line but affected by the -- this 10% inflation in reals and will depend on how we finalize with the FX. So that's the answer regarding CapEx.

Thanks, Charlie. But just a quick follow-up. Do you have at least a range of how much total expansion CapEx you should have this year, in million dollars?

We should expect similar to what we had last year, in line with last year.

(Operator Instructions) Our next question comes from Christian Audi from Santander.

I wanted to go back for a second to the capital allocation topic. So you mentioned very clearly that your priority is dividends and buybacks. And then you also touched on CapEx expansion and maintenance. What I wanted to ask about is, on the CapEx growth front, anything that you're seeing related to M&A that could be considered for this year?

And then secondly, on the debt side, can you remind us, given all that's happening in this market, what level of net debt to EBITDA you would feel comfortable with going forward? And I think the other questions were already answered. So yes, it was just related to how you prioritize your capital allocation among these different elements, dividends, CapEx, debt, M&A. So that would be very helpful, please.

Okay. Thank you, Christian, very much for your question. Number one, we've been talking about the debt levels at which we feel comfortable, and we've been always talking about 2x below -- to be always below 2x EBITDA net debt. So that's something that we continue to think, and we are very committed to these numbers. So you shouldn't expect to see higher number than what I just mentioned, this 2x EBITDA and always below that number.

So taking that into account, what we are expecting today is to continue with this, as I just mentioned, small synergy projects all around our different existing businesses. I wouldn't expect any M&A outside with where we are currently making focus, on our 4 lines of businesses. So I would be very clear there, I wouldn't expect anything there. Whether M&A within our existing businesses, of course, we always look at them, but we haven't seen anything attractive enough to be -- to create value to our shareholders. That's why we haven't entered into any of those things that we've been looking at.

Understood. And on the CapEx front, can you talk a little bit about new -- particularly in the sugar and ethanol front, any new products you may be looking into as potential areas of growth in the future, be it a second-generation ethanol, biogas, et cetera?

Sorry. Thank you, Christian. I think as we've been talking about, where we are working is on our sustainable production model. So within this sustainable production model, we are seeing still more things to get into so to be more sustainable. In the biofertilizer front, we are increasing the amount of vinasse that we are transforming into biofertilizer, and we are also increasing the amount of methane that we are taking from the biovinasse and using it as an energy generator. And that energy generator could be replacing diesel, that is one of the projects that we are involved in, and also creating more sales of electricity. So there is where we are working in order to continue increasing our sustainability front and to generate more revenues coming from the current system that we have.

Great. And the last follow-up, corn ethanol, is that something that you're -- you think it's interesting from a strategic point of view?

Thank you for the question, Christian. We've been analyzing corn ethanol many times. We think that the concept makes sense. But for us, particularly, and because of the region where we are, we think that the sugarcane is much more efficient than the corn because at the end of the day, we are taking ethanol out of the land and out of our sustainable production model. So taking that into account, we think that we are much more efficient with the sugarcane than with the corn in the specific areas where we are.

Great. And -- sorry, and the very last one. (inaudible) you talked about taking to your 40% of net cash the ability -- given that you may continue to do so well, generating so much cash with high sugar and ethanol prices, your willingness to pay extraordinary dividends. Can you tell us a little bit about how you think about that? In other words, paying dividends in addition to the 40% that your formula calls for, please?

No, we've been -- we are committed to pay -- to distribute through dividend and buyback at least 40% our net cash from operations. Last year in 2021, we distributed 51% of our net cash from operations of the previous year. So can we expect to distribute more or not? Yes, we can expect to distribute more because we've done it in the past, and we can do it going forward. But that will depend on this CapEx opportunities, on the not -- always being below the 2x net debt to EBITDA, et cetera. So all the criteria that we've been talking about.

(Operator Instructions) And ladies and gentlemen, this will conclude today's question-and-answer session. At this time, I'd like to turn the floor back over to Mr. Bosch for any closing remarks.

Thank you, everyone, for participating in the call, and see you in our upcoming event.

Thank you. This concludes today's presentation. You may now disconnect your lines. Please have a nice day.