Lavoro Reaches Out-of-Court Restructuring Agreement with Key Suppliers and Reports Certain Preliminary Unaudited Financial Information for Second Quarter of Fiscal 2025

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• Lavoro Brazil reached an agreement with its principal suppliers providing for a multi-year inventory financing framework and the extension of obligation payment terms, positioning the business unit for recovery
• 2Q25 preliminary unaudited¹ consolidated revenue was R$2.25 billion, a decrease of 27% year-over-year, primarily due to inventory shortages in Brazil Ag Retail; preliminary unaudited consolidated gross profit decreased 28% to R$366.9 million
• FY2025 guidance withdrawn
• Management to host a conference call today, at 5:00 p.m. ET (6:00 p.m. BRT)

SÃO PAULO, June 18, 2025 (GLOBE NEWSWIRE) -- Lavoro Limited (Nasdaq: LVRO, LVROW) ("Lavoro”, or the "Company”), the first U.S. listed pure-play agricultural inputs retailer in Latin America, announced today that its subsidiary, Lavoro Agro Holding S.A. ("Lavoro Brazil”) has reached an out-of-court restructuring agreement with a number of its principal product suppliers that provides for the extension of payment terms and secures future product supply for a muti-year period in order to help mitigate further supply chain disruption ("Agreement”).

"This Agreement reflects the trust and long-term commitment we have established with our key suppliers,” said Ruy Cunha, CEO of Lavoro. "By securing a multi-year supply agreement with transparent and standardized inventory financing terms, we are not only taking important steps toward resolving immediate product availability constraints, but also enhancing the long-term predictability of Lavoro Brazil's operations. Moreover, the extension to supplier payment obligations will provide us the flexibility to right-size Lavoro Brazil's fixed cost structure, drive operational efficiencies, and sharpen the strategic focus on its core strengths, which we believe will help ensure it emerges from this cycle as a leaner, more agile and resilient business unit.”

Accordingly, Lavoro Brazil formally submitted to the Brazilian courts today an out-of-court negotiated reorganization plan ( "EJ Plan”) in connection with the Agreement. The EJ Plan, structured under Brazil's Recuperação Extrajudicial legal framework, will become binding on all eligible product suppliers upon court approval, and not just those who are parties to the initial Agreement, thereby ensuring broad-based effectiveness of the reorganization process.

The principal suppliers party to the Agreement include BASF, FMC Agrícola, UPL Brasil, EuroChem, and Ourofino, and are committed to supporting Lavoro Brazil's EJ Plan. Discussions with other key suppliers are ongoing and at advanced stages but were not finalized in time for inclusion in the initial EJ Plan submission. While full ratification of the Agreement is conditional upon court approval of the EJ Plan, its supply and financing terms are already in effect, and the normal flow of inventory from these partners has resumed in the fourth fiscal quarter.

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¹ See "Preliminary Information below.

The EJ Plan involves the product suppliers of Lavoro Brazil, and does not impact financial lenders and creditors, third-party service providers, contractors, or employees. Furthermore, the EJ Plan applies solely to Lavoro Brazil, which comprises the Brazil Ag Retail segment and includes Perterra², a subsidiary consolidated under Crop Care. Lavoro's other subsidiaries within the segments Latam Ag Retail and Crop Care (excluding Perterra) are not included in the EJ Plan.

The EJ Plan provides for an extension of supplier obligations due in FY25, rescheduling repayments over a two- to five-year period, which would improve Lavoro Brazil's financial flexibility. In addition, the EJ Plan establishes a multi-year contractual framework that would standardize inventory supply and financing terms, ensuring reliable product availability and mitigating the risk of future abrupt changes in industry-wide credit conditions that could disrupt Lavoro Brazil's operations.

As context, Brazil's 2023/24 crop year was impacted by a confluence of headwinds including falling commodity and agricultural input prices, declining farmer profitability, severe droughts across key producing states, and restricted liquidity for farmers. Lavoro Brazil navigated this challenging environment by gaining market share and entered FY25 positioned to benefit from signs of market stabilization.

However, as previously disclosed in the Company's 1Q25 earnings release, a sharp deterioration in inventory financing conditions, exacerbated by the judicial reorganization of a major agriculture retail competitor in Brazil, led to severe product shortages during the peak of crop planting season. This disruption materially affected Lavoro Brazil's commercial operations in November and December.

Although negotiations with key suppliers in January partially alleviated bottlenecks, it became clear that the typical bilateral approach of negotiating with each supplier individually would not sufficiently resolve the product supply issue to avoid significant impacts in fiscal 2026. Lavoro management believes the EJ Plan emerged as the most effective solution to align suppliers under a standardized inventory supply and financing structure, helping ensure stability going forward.

Key Details of the EJ Plan

The EJ Plan restructures approximately R$2.5 billion in trade payables owed by Lavoro Brazil to its agricultural input suppliers as of the filing date. The EJ Plan categorizes suppliers into a few creditor classes, each with tailored repayment and supply obligations:

• General Supporting Creditors: Receive 100% of principal, with interest indexed to Brazil's inflation index (IPCA). Up to 10% of supplier claims are payable in-kind through products previously purchased and currently held in inventory by Lavoro Brazil. The remaining balance to be paid Repayment to occur in 10 equal semiannual installments from September 2025, through April 2030.
• Seed Supporting Creditors: Receive 100% of principal, with IPCA-indexed interest. Repayment to occur in 5 equal semiannual installments from October 2025, through September 2027.

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² Perterra Trading S.A. and Perterra Distribuidora de Insumos S.A., collectively referred to as "Perterra”. 

• Special Supporting Creditors: Receive 100% of principal, with IPCA-indexed interest. Up to 20% of supplier claims (or up to 40% of the claim for US dollar denominated claims) are payable in-kind through products previously purchased and currently held in inventory by Lavoro Brazil. The remaining balance to be paid in 8 equal semiannual installments from September 2025, through April 2029.
• Small Supporting Creditors: Receive a lump-sum cash payment of up to R$50,000, with the balance (if any) discharged.
• Non-Supporting Creditors: Receive a single cash payment equivalent to 50% of the claim on June 2032, with IPCA-indexed interest accrued until the payment date.

In parallel, the EJ Plan includes a multi-year inventory supply and financing framework with certain supporting creditor class, standardizing commercial terms and ensuring product availability through the length of the EJ Plan.

The EJ Plan was filed with the São Paulo reorganization court on June 18^th, 2025. Upon confirmation by the court, the EJ Plan will result in the novation of affected obligations, extinguish related judicial proceedings, and provide for the release of guarantees, and credit bureau regularization under Brazilian law.

The full EJ Plan can be found on Lavoro's Investor Relations website.

Impact of EJ Plan on 2Q25 Financial Disclosure and Guidance

Given the complexities associated with the EJ Plan, which impacted the completion of Lavoro's financial closing procedures, Lavoro is providing certain preliminary unaudited financial information relating to revenue and gross profit for the second quarter of fiscal 2025. Lavoro remains committed to transparency and expects to provide full financial results upon completion of these procedures.

As a result of these dynamics, the Company has determined it is prudent to withdraw its previously issued fiscal 2025 financial outlook at this time.

2Q25 Preliminary Unaudited Revenue and Gross Profit Financial Information^3,4

• 2Q25 preliminary unaudited consolidated revenue was R$2.25 billion, a decrease of 27% year-over-year (y/y), primarily due to inventory shortages in Brazil Ag Retail which led to booking cancellations and indirectly impacted Crop Care revenue as well. In USD terms, revenue decreased 38% y/y to $384.4 million, including a 15% depreciation of the Brazilian real (BRL) relative to the prior year period.
• 2Q25 preliminary unaudited consolidated gross profit decreased 28% to R$366.9 million, with gross margins contracting 40 bps to 16.3%, driven primarily by lower distribution margins in Brazil Ag Retail and adverse product mix effect in Crop Care. In USD terms, gross profit decreased by 39% to $62.8 million.

Brazil Ag Retail

• Brazil Ag Retail's preliminary unaudited segment revenue declined 30% y/y to R$1.84 billion in 2Q25, due to the previously mentioned product availability constraints.
• Preliminary unaudited segment gross margin contracted by 240bps to 11.5%. This margin compression reflects the strategic decision to prioritize long-term client relationships by fulfilling orders with equivalent or, in many cases, superior products to those that were originally ordered items but unavailable, at the expense of short-term profitability.

Latam Ag Retail

• Latam Ag Retail preliminary unaudited segment revenue increased 4% to R$287.3 million in 2Q25, reflecting stable market conditions and the appreciation of the Colombian peso relative to the Brazilian real.
• Preliminary unaudited segment gross profit increased by 32% to R$64.8 million, with gross margins expanding by 480 bps to 22.6%, driven by improved margins in seeds and specialty products, and the positive effect from product category mix shifts.

Crop Care

• Crop Care preliminary unaudited segment revenue was R$251.5 million in 2Q25, a decrease of 30% y/y, driven by two separate factors. First, Agrobiologica's sales were negatively affected by temporary, industry-wide regulatory uncertainty surrounding "on-farm” biologicals, a situation that has since been resolved following the enactment of new legislation. Second, sales of specialty fertilizers and adjuvants from Crop Care subsidiaries Union Agro and Cromo to Lavoro Brazil were negatively affected by the cancellation of bundled purchase orders due to broader product shortages.

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³ Preliminary unaudited financial information presented in US dollars in throughout this release are converted using the following average period USD/BRL exchange rate: 5.841 for 2Q25, 5.546 for 1Q25, 4.955 for 2Q24, and 4.883 for 1Q24.

⁴ See "Preliminary Information” below.

• Crop Care preliminary unaudited segment gross profit fell 53% y/y to R$59.5 million, with gross margins contracting 1,160 basis points to 23.7%. The margin compression reflected an unfavorable shift in product mix, led by weaker biological sales, as well as pressure from fixed-cost under-absorption and higher raw material costs due to the weaker BRL.