Lavoro Limited reported QQ1 2023 results with solid top-line scale in BRL, but significant margin compression and a pronounced financing burden overshadow operating performance. Revenue reached BRL 2.366 billion, up modestly year-over-year, while gross profit was BRL 293.285 million for a gross margin of 12.4%, down from about 20.7% in QQ1 2022. EBITDA stood at BRL 108.316 million (EBITDA margin ~4.58%), yet the quarter produced an operating loss of BRL 27.568 million and a net loss of BRL 66.537 million, driven largely by elevated interest expense of BRL 222.504 million and a tax effect that reflects a negative net tax outcome in the period.
From a liquidity and leverage perspective, the company exhibits a fragile near-term balance with a current ratio of 1.02 and a negative cash conversion profile on an annualized basis (DSO ~119.6 days, DIO ~111.0 days, CCC ~73.4 days). Leverage remains meaningful, with a debt ratio of 0.205 and total debt to capitalization of 0.515, while interest coverage is negative (-0.124x) due to the operating loss. On the capitalization front, the stock trades with a price-to-book around 2.10 and a price-to-sales of ~1.61, but offers negligible dividend yield, and negative free cash flow per share (-BRL 5.41).
Management commentary for QQ1 2023 was not available in the provided transcript, limiting direct quotes. Nevertheless, the results suggest a near-term operating challenge tied to financing costs and margin mix, even as revenue scale remains supportive. The longer-term thesis hinges on margin stabilization, deleveraging, and a shift toward higher-margin specialty and biological crop inputs, alongside continued LATAM footprint expansion.