Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce that it has received a Mining Concession[1] for extraction of up to 2,500,000 tonnes per year (“tpy”) of potash rich ore, which is processed into Verde’s multinutrient potassium products, BAKS® and K Forte®, sold internationally as Super Greensand®, (the “Product”). With this new Mining Concession, the Company is now fully permitted to produce up to 2,833,000 tpy.
“This mining concession marks one more milestone for Verde. It will supply raw material for our Plant 2, which will boost production and accelerate sales growth. It is also another important governmental stamp of approval for our efforts towards reducing Brazil’s crippling dependency on imported potash”, said Cristiano Veloso, Verde’s Founder and CEO.
On March 26, 2020, the National Mining Agency (“ANM”), Brazil’s mining regulatory body, approved the Feasibility Study (“PAE”, from Plano de Aproveitamento Econômico) for the extraction of 25,000,000 tpy for Verde’s Mine Pit 2, as part of the Mining Concession Application (known in Brazil as Requerimento de Lavra). The Feasibility Study details the technical and economic viability of the project and indicates, among other information, the mining method and scale of production.
The Mining Concession was preceded by an Environmental License assessed and issued at the state level by Minas Gerais’ Environmental and Sustainable Development Secretary (known in Brazil as Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável). The Company had applied for the 2,500,000 tpy Environmental License for Mine Pit 2 on March 30, 2020, and it was approved on December 23, 2020.
This Mining Concession was granted to the Company as an expansion to the existing 100,000 tpy Mining Permit (in Brazil known as Guia de Utilização), previously granted for Mine Pit 2. In total, the Company is now permitted to extract up to 2,600,000 tpy from Mine Pit 2 alone.
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. With this latest Mining Concession, Verde is now fully permitted to mine 2,833,000 tpy (please see the topic “Summary of Licenses and Permits” below) and has submitted concurrent mining and environmental applications for an additional 2,500,000 tpy, still pending approval.
Summary of Licenses and Permits
The Company has 3 different mine pits, each at different permitting stages and targeting different volumes, as summarized in the table below.
| Mine Pit |
Fully Permitted to Produce (tpy) |
Mining (tpy) |
Environmental (tpy) |
| Granted |
Pending |
Granted |
Pending |
| 1 |
233,000 |
233,000 |
0 |
233,000 |
0 |
| 2 |
2,600,000 |
2,600,000 |
22,500,000 |
2,600,000 |
0 |
| 3 |
0 |
49,800 |
2,500,000 |
0 |
2,500,000 |
| Total |
2,833,000 |
2,882,800 |
25,000,000 |
2,833,000 |
2,500,000 |
2022 Guidance
On January 10, 2022, Verde issued a press release announcing the 2022 and 2023 guidance. The Company’s target is detailed on a quarterly basis, reflecting the market demand’s seasonality, as follows:
| Period |
Q1 2022 |
Q2 2022 |
Q3 2022 |
Q4 2022 |
FY 2022 |
| Sales target (tonnes) |
115,000 |
200,000 |
250,000 |
135,000 |
700,000 |
| Revenue (C$’000) |
10,070 |
21,954 |
27,228 |
13,011 |
72,263 |
| EBITDA (C$’000) |
1,358 |
10,155 |
13,414 |
3,506 |
28,434 |
| EPS (C$) |
0.02 |
0.18 |
0.25 |
0.06 |
0.50 |
The 2022 guidance is underpinned by the following assumptions:
- Grant of mining concession
- Average Brazilian Real (“R$”) to Canadian dollar exchange rate: C$1.00 = R$4.40
- Average KCl CFR Brazil of US$500, compared to current price of US$760 per tonne (as per the market intelligence firm Acerto Limited weekly price as of December 3, 2021).
- Sales Incoterms: 50% CIF and 50% FOB
- Sales channels: 50% direct sales and 50% indirect sales
2023 Guidance
For 2023, Verde’s sales volume target is 1.4 million tonnes. This target represents a potential 100% growth Year-on-Year (“YoY”).
About Verde AgriTech
Verde is an agricultural technology company that produces fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Corporate Presentation
For further information on the Company, please view shareholders’ deck: https://verde.docsend.com/view/p9qyzinwe64ii4ke
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
Cautionary Language and Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.
For additional information please contact:
Cristiano Veloso, President, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.supergreensand.com | www.verde.ag
[1] Mining Concession (known in Brazil as “Portaria de Concessão de Lavra”): guarantees to the owner the power and duty to explore the mineral deposit until it is exhausted, without a definite term. The title can only be obtained by mining companies and only after undertaking the authorised exploration through an exploration authorisation and subsequent approval of the Final Exploration Report. One of the essential documents for requesting a mining concession is the Feasibility Study, which must demonstrate the technical and economic viability of the project and indicate, among other information, the mining method, the planned scale of production and the mine closure plan.
BELO HORIZONTE, Brazil, Feb. 08, 2022 (GLOBE NEWSWIRE) — Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce a rate of 165% Earned Growth in 2021, compared to a rate of 61% in 2020, demonstrating a higher client repurchase rate and successful client referrals. The Earned Growth Rate (“EGR”) measures the sales growth by volume generated by returning customers and new client purchases made by existing clients’ referrals.1
The Earned Growth methodology was created by Fred Reichheld, a business strategist at Bain & Company who is renowned for his research and writing on the loyalty business model and loyalty marketing, and author of Winning on Purpose: The Unbeatable Strategy of Loving Customers.2 EGR was created as a metric framework for customer success in lieu of traditional methodologies, which are usually based on samples of survey responses that do not have a specific sector methodology and can be easily biased according to the criteria utilised.
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 customer loyalty through the lens of revenue growth, identifying which revenue streams come from existing customers doing more business with a company and which ones come from referrals.
Historically, Verde assessed its rate of recurring clients through repurchases, which showed the percentage of repeat clients that bought Verde’s product over two consecutive years.
The Company has continuously contacted its clients for feedback surveys, contacting both repurchasing clients and clients that did not purchase the following year. It became clear that the rate of repurchase alone distorted the reality of agricultures’ cyclicity. Farmers may decide not to repurchase for several reasons disconnected from product satisfaction, including but not limited to:
- If soil nutrient is adequate for the next season’s productivity expectation;
- Market volatility impacting prices of the grown crop;
- Credit issues causing inability to secure enough funds to cover full harvest requirements;
- Natural peculiarity of crop that leads to different fertilization requirement when crop growth does not require annual fertilizer; (e.g. eucalyptus, coffee, etc.);
- Expiration of farm leases that were harvested previously;
- Adverse climate impact, such as drought or frost, that often resulting in crop loss and thus no need or financing for subsequent fertilizer application.
Therefore, over the past year, Verde studied the latest methodologies that could adequately reflect growth and customer success within the realities for agriculture.
Earned Growth Rate has two independent components:
- Net Revenue Retention (“NRR”): The current year’s revenues from repurchasing customers, divided by the preceding year’s total revenues, expressed as a percentage. In the case of Verde, ‘revenue’ has been replaced by ‘volume’ so that product price fluctuations do not unduly distort the metric.
- Earned New Customers (“ENC”): The percentage of product volume acquisition from new customers earned through referrals.
EGR is determined by adding NRR and ENC together and then subtracting 100%.
Prompted for comment on Verde’s adoption of the EGR metric, Reichheld was categorical in asserting that he “believes that wise investors now understand the vital importance of Earned Growth Rate as an indicator of profitable, sustainable growth”.
In 2020, the first year when the company compiled detailed enough information to calculate its EGR, Verde had a rate of 61% EGR. In 2021, Verde’s EGR rate hit 165%.
“At Verde, client satisfaction and retention is paralleled by our rapid growth. To adequately measure our client success rate and be able to drive our sales team to its best performance, EGR is already one of our key metrics. We are honoured to see a nearly threefold increase of EGR in 2021 because it is a reflection of how Verde’s client base is increasingly embracing our products, repurchasing it or endorsing it to friends and neighbours.”, said Cristiano Veloso, Verde’s Founder and CEO.
Verde’s New Brand Identity
The Company updates its visual identity to better reflect its purpose. The new logo reinforces the idea that technology and nature can go hand in hand to make agriculture more productive, profitable and nutritious. The logo’s “V” connects at its vertices the two main arms of the company – technology and nature – in an upward movement, to show that this junction brings growth, the achievement of good results, and will contribute to a more sustainable and healthier world. The new colour palette is inspired by the hue of Verde’s main raw material, which is at the base of the products developed by the Company.
For more details, access the shareholder deck to learn more about our new brand identity:
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
About Verde AgriTech
Verde is an agricultural technology company that produces fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Cautionary Language and Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.
For additional information please contact:
Cristiano Veloso, President, Chairman & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.supergreensand.com | www.verde.ag
1 For a summarized definition of EGR, see article: F. Reichheld, D. Darnell and M. Burns, Net Promoter 3.0, Harvard Business Review, November 2021, available at: https://hbr.org/2021/11/net-promoter-3-0
2 F. Reichheld, D. Darnell and M. Burns, Winning on Purpose: The Unbeatable Strategy of Loving Customers (Harvard Business Review Press) 2021.
Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its Paid for Growth (“P4G”) strategy, a cornerstone program aimed at distributing gains to shareholders as a result of the Company’s continued accelerated market expansion. This will be possible thanks to the availability of a transformative source of funding secured by the Company. Previously, financing could only be secured by invoice discounting or guaranteed by capital goods, now Verde’s future sales contracts are accepted as debt collateral.
The Company also communicates an expansion to its Cultivando Amor program, a charitable initiative aimed at supporting local rural communities.
“In Brazil, no other bank has financed more harvests than Banco do Brasil. In 2020 alone, it financed Brazil’s agriculture to the tune of R$ 191 billion. It is therefore fitting that the bank step up to provide this important credit facility to Verde, thereby helping fuel the accelerating production of our potash rich multinutrient fertilizer that will be vital for countless more harvests in our country”, affirmed Dr. Alysson Paolinelli, former Brazilian minister of agriculture, recipient of the World Food Prize and member of Verde’s Board of Directors.
Banco do Brasil S.A. (“BB”) has granted to Verde a line of credit through Agribusiness Certificate of Credit Rights (“CDCA”, from Certificado de Direitos Creditórios do Agronegócio). A CDCA is a financial instrument used by established Brazilian agricultural businesses, it is a freely traded credit bond that represents expected cash payments originating from farmers and third parties. Its issuance and use are limited to the agricultural sector, be it farming production and processing, or industrialized farming inputs and machinery. CDCA is only granted to producers of broadly traded and accepted commodities and goods.
Verde’s loan is for a term of 36 months with an interest rate of CDI (based on SELIC, the Brazilian Central Bank overnight rate) + 2.92% per annum, with a 6 months grace period. The guarantee of the operations are future sales contract with Verde. The first loan was for R$10 million.
The financing was granted by BB after thorough due diligence that included an evaluation of Verde’s historical market and sales performance, seeing that the credit arrangement recognizes future sales contracts as collateral, with no further pre-conditions for its execution and grant.
The funds raised through this new loan modality will be used for accelerated expansion. Consequently, Verde will free up its earnings and re-finance its growth based on an expanding credit line proportional to its required growth capital investment and forecasted sales. This can be done so long as there is an upwards trajectory for production because then future sales are expected to continuously outstrip current production.
“I am proud to have started my formal work career at Banco do Brasil, at the age of 18, and grateful for everything I learned during that experience. Today, it is therefore exciting to see the bank playing a key role in helping Brazilian farmers to retake control by financing Verde, Brazil’s largest potash mine.
It is crippling for our country to rely on imports for 96% of our potash needs. Given Brazil’s role as the world’s largest food exporter, it is equally worrying to think that the bread basket of the World would succumb without three distant sources of potash: Canada, Russia and Belarus, which jointly account for around 80% of all global potash sales.
Debt funding alongside accumulated cashflow has been and will continue to be the preferred route to accelerate Verde’s growth even more, especially now in light of Banco do Brasil’s transformative financing structure”, commented Verde’s Founder, President & CEO Cristiano Veloso.
Paid for Growth and Cultivando Amor
Verde’s P4G was launched by the Company to enable it to distribute earnings to shareholders, while expanding production. P4G is being engineered in detail so that it can make the most of the Company’s potential earnings without compromising its accelerated growth strategy.
As it returns gains to its shareholders, Verde will also expand its ongoing Cultivando Amor program. This is a charitable initiative in which the Company sits down with local rural communities located in the region of its operations and market to jointly select commendable social projects and charitable institutions to be supported.
“It has been nearly 17 years since we founded Verde. I am ever thankful to several shareholders who have patiently supported us along the nearly two decades of development. We hope that today’s announcement will motivate all shareholders to support Verde for decades to come while earning their well-deserved share of our success.
It was never easy to implement our non-dilutive strategy over so many years, but we are proud to reach our 17th year as a profitable company with an outstanding share count not too different from day one of our 2007 IPO”, concluded Mr. Veloso.
About Banco do Brasil:
Banco do Brasil is a Brazilian bank, incorporated as a mixed capital company, with the Federal Government of Brazil holding 50% of the shares (as of November 17, 2021), being one of the five state-owned banks of the Brazilian government, traded on the B3 as BBAS3.
BB was founded in 1808 and has been working in several countries for over 70 years. The bank has a great branch network in Brazil and abroad, with more than 5,000 of branches worldwide, establishing extensive experience in global financial markets.
About Cultivando Amor Project:
Cultivando Amor is a project that emerges from Verde’s commitment to honour its core purpose: improving the health of all people and the planet.
For each of the project’s member cities, there is a partner charity institution. For each hectare in the region that is cultivated with BAKS® or K Forte®, Verde donates part of the sales’ profits to the partner institution of that city. The initiative has the support of the cities’ Rural Union of Farmers (Sindicato Dos Produtores Rurais).
In 2020, Cultivando Amor’s pilot project was conducted in the city of Patrocínio, where the program’s funds contributed to the Cancer Hospital of Patrocínio, a regional reference in cancer treatment.
In 2021, Verde raised over R$270,000 for charities across 16 cities in Brazil.
Cultivando Amor’s goal for 2022 is to magnify its impacts exponentially: to be present in over 100 cities throughout Brazil.
Investors Newsletter
Subscribe to receive the Company’s monthly updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
About Verde AgriTech
Verde is an agricultural technology company that develops and produces fertilizers. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable for farmers. We work to improve the health of all people and the planet.
Cautionary Language and Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.
For additional information please contact:
Cristiano Veloso, President, Founder & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.verde.ag | www.supergreensand.com
Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its 2022 guidance of 700,000 tonnes production, with sales of $72.3 million, EBITDA of $28.4 million, net earnings per share (“EPS”) of $0.50; and a 2023 guidance of 1.4 million tonnes.
2022 Guidance
The Company’s target is detailed on a quarterly basis, reflecting the market demand’s seasonality, as follows:
| Period |
Q1 2022 |
Q2 2022 |
Q3 2022 |
Q4 2022 |
FY 2022 |
| Sales target (tonnes) |
115,000 |
200,000 |
250,000 |
135,000 |
700,000 |
| Revenue ($’000) |
10,070 |
21,954 |
27,228 |
13,011 |
72,263 |
| EBITDA ($’000) |
1,358 |
10,155 |
13,414 |
3,506 |
28,434 |
| EPS ($) |
0.02 |
0.18 |
0.25 |
0.06 |
0.50 |
The 2022 guidance is underpinned by the following assumptions:
- Grant of mining concession
- Average Brazilian Real (“R$”) to Canadian dollar exchange rate: C$1.00 = R$4.40
- Average KCl CFR Brazil of US$500, compared to current price of US$760 per tonne (as per the market intelligence firm Acerto Limited weekly price as of December 3, 2021).
- Sales Incoterms: 50% CIF and 50% FOB
- Sales channels: 50% direct sales and 50% indirect sales
“Over the previous years, seeing that we were producing and selling a new product, our guidance was limited to volume and revenue. From 2022 onwards we are pleased to add EBITDA and EPS to Verde’s guidance”, said Cristiano Veloso, Verde’s Founder and CEO.
2023 Guidance
For 2023, Verde’s sales volume target is 1.4 million tonnes. This target represents a potential 100% growth Year-on-Year (“YoY”).
Investors Newsletter
Subscribe to receive the Company’s monthly updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at:
About Verde AgriTech
Verde is an agricultural technology company that develops and produces fertilizers. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable for farmers. We work to improve the health of all people and the planet.
Cautionary Language and Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.
For additional information please contact:
Cristiano Veloso, President, Founder & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.verde.ag | www.supergreensand.com
(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q3 2021: C$1.00 = R$4.26)
Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its financial results for the third quarter, ended on September 30, 2021 (“Q3 2021”).
Q3 2021 Financials
- Revenue increased by 169%, to $10,651,000 compared to $3,956,000 in the third quarter of 2020 (“Q3 2020”).
- Revenue in Brazilian Real (“R$”) increased by 206%, to R$45,409,000 compared to R$14,815,000 in Q3 2020.
- Gross margin increased to 77% in Q3 2021, compared to 67% in Q3 2020.
- Operating profit before non-cash events increased by 124%, to $3,665,000 compared to $1,635,000 in Q3 2020.
- Trade and other receivables increased by 141%, to $8,238,000 compared to $3,415,000 in Q3 2020.
- Sales by volume increased by 45%, to 153,674 tonnes sold compared to 105,769 tonnes sold in Q3 2020.
- Net profit increased by 192% in Q3 2021, to $3,183,000, compared to $1,090,000 in Q3 2020.
“Our hard work over the years is yielding consistent growth since production started in 2017. In Q3 2021 the effort was relentless as we sought to meet our heightened target, which was achieved thanks to the high quality and commitment of our team. We will endeavour to maintain an exponential growth expansion for the foreseeable future”, said Cristiano Veloso, Verde’s Founder and CEO.
Subsequent Events
- In October 2021, the Company has secured $3.75 million (R$16 million) in loan agreements to fully cover the capital expenditure for the construction of Plant 2. The first $1.17 million (R$5 million) was released to the Company by Santander. The remaining $2.58 million (R$11 million) was approved in the same month by Santander and Bradesco, to be drawn down according to the project requirements. The total construction cost of Plant 2 is expected to be $5.16 million (R$22 million) with $1.41 million (R$6 million) invested through internally generated cashflow.
“From September onwards, market demand has outstripped Plant 1’s operational capacity. Therefore, after having invested over C$66 million to reach our current rate of production, we are proud to finance the tripling of current capacity based on debt and cashflow alone. Many shareholders have continuously supported Verde over the years – it is therefore gratifying to reciprocate by growing through a shareholder-friendly dilution-free strategy”, declared Mr. Veloso.
2021 Guidance
The Company is pleased to announce another increase in its 2021 guidance. The new target is set at R$110 million of revenue for 2021, which would represent an increase of 120% to the Company’s original guidance of R$50 million. If achieved, this new target will represent a 212% growth Year-on-Year (“YoY”).
Selected Annual Financial Information
The table below summarizes Q3 2021 financial results compared to Q3 2020 and provides information about 2021 and 2020 year-to-date (“YTD”). All amounts in CAD $’000.
| CAD $’000 |
Q3 2021 |
Q3 2020 |
YTD 2021 |
YTD 2020 |
| Tonnes sold ‘000 |
154 |
106 |
266 |
187 |
| Revenue per tonne sold $ |
69 |
37 |
63 |
37 |
| Production cost per tonne sold $ |
(16) |
(12) |
(17) |
(14) |
| Gross Profit per tonne sold $ |
53 |
25 |
47 |
23 |
| Gross Margin |
77% |
67% |
74% |
63% |
|
|
|
|
|
| Revenue |
10,651 |
3,956 |
16,858 |
6,957 |
| Production costs |
(2,452) |
(1,316) |
(4,440) |
(2,602) |
| Gross Profit |
8,199 |
2,640 |
12,418 |
4,355 |
| Gross Margin |
77% |
67% |
74% |
63% |
| Sales and product delivery freight expenses |
(4,022) |
(570) |
(6,789) |
(1,596) |
| General and administrative expenses |
(512) |
(435) |
(1,631) |
(1,203) |
| Operating Profit before non-cash events |
3,665 |
1,635 |
3,998 |
1,556 |
| Share Based and Bonus Payments (Non-Cash Event) (1) |
(13) |
(339) |
(1,528) |
(407) |
| Depreciation and Amortisation |
(20) |
(3) |
(35) |
(18) |
| Profit on disposal of plant and equipment |
– |
(18) |
9 |
(18) |
| Operating Profit after non–cash events |
3,632 |
1,275 |
2,444 |
1,113 |
| Income tax |
(352) |
(136) |
(571) |
(252) |
| Interest Income/Expense |
(98) |
(49) |
(229) |
(119) |
| Net Profit |
3,182 |
1,090 |
1,644 |
742 |
(1) – Included in General and Administrative expenses in financial statements.
Q3 2021 compared with Q3 2020
For Q3 2021 the Company generated a net profit of $3,182,000, an increase of $2,093,000 compared to Q3 2020. The earnings per share was $0.06, compared to $0.02 for Q3 2020.
Product Sales
In Q3 2021, the Company sold 153,674 tonnes, an increase of 45% in comparison to Q3 2020. BAKS® accounted for approximately 10% of Verde’s sales in Q3 2021.
Revenue
Revenue from sales for Q3 2021 was $10,651,000 from the sale of 153,674 tonnes of the Product, at $69 per tonne sold. Despite the 14% Brazilian Real devaluation against the Canadian Dollar, revenue per tonne was higher than Q3 2020 ($37 per tonne sold) mainly due to three factors:
- Product volume sold as CIF (Cost Insurance and Freight) increased from 14% of total sales in Q3 2020 to 50% in Q3 2021.
- Potassium Chloride CIF (Minas Gerais) price increased from US$290-US$310 per tonne in Q3 2020 to US$515-790 per tonne in Q3 2021 (as reported by Acerto Limited, a market intelligence firm).
- BAKS has a higher sales price per tonne than the Product, it was launched in Q4 2020 and in Q3 2021 it accounted for 10.5% of the total volume sold.
Production costs
Production costs in R$ include all direct costs from mining, processing, and the addition of the other nutrients such as Sulfur and Boron, the logistics from the mine to the factory and related salaries. Production costs for Q3 2021 were $2,452,000, an increase of $1,136,000 compared to Q3 2020. Cost per tonne for the quarter was $16 compared to $12 for the same period in 2020. This increase was due in large part to higher fuel prices, which increased 80% in Q3 2021 compared to Q3 2020, and due to the production of BAKS, which has a higher cost per tonne because its feedstock includes other nutrients that Verde purchases from third parties.
Sales Expenses
| CAD $’000 |
Q3 2021 |
Q3 2020 |
YTD 2021 |
YTD 2020 |
| Sales and marketing expenses |
(601) |
(294) |
(1,241) |
(796) |
| Fees paid to independent sales agents |
(188) |
(12) |
(260) |
(145) |
| Product delivery freight expenses |
(3,233) |
(264) |
(5,288) |
(655) |
| Total |
(4,022) |
(570) |
(6,789) |
(1,596) |
Sales and marketing expenses
Sales and marketing expenses include employees’ salaries, car rentals, travel within Brazil, hotel expenses, customer relationship management (CRM) software licenses, and the promotion of the Product in marketing events. Expenses increased by $483,000 in Q3 2021 compared to Q3 2020 mainly due to a further expansion of Verde’s sales and marketing team, with professional headcount increasing from 32 in Q3 2020 to 57 in Q3 2021. This increase is in line with the Company’s accelerated growth strategy. The Company’s sales and marketing team had 50 employees in Q2 2021.
Fees paid to independent sales agents
As part of Verde’s marketing and sales strategy, the Company pays out commissions to its independent sales agents. Fees paid to sales independent agents increased by $176,000 in Q3 2021 compared to Q3 2020. This was mainly due to an overestimated provision of $80,000 for Q1 and Q2 2020, which left a surplus that was therefore deducted from the Q3 2020 costs. Taking into account the surplus, the expenses increased by $96,000 for Q3 2021, due to increased sales success.
Product delivery freight expenses
Product delivery freight expenses were $2,969,000 higher in Q3 2021 compared to Q3 2020 as the Company has significantly increased the volume sold as CIF (Cost Insurance and Freight), up from 14% of total sales in 2020 to 50% in 2021 and due to higher fuel prices, which increased 80% in Q32021 compared to Q3 2020.
General and Administrative Expenses
| CAD $’000 |
Q3 2021 |
Q3 2020 |
YTD 2021 |
YTD 2020 |
| General administrative expenses |
(291) |
(240) |
(1,009) |
(656) |
| Legal, professional, consultancy and audit costs |
(134) |
(160) |
(399) |
(444) |
| IT/Software expenses |
(82) |
(26) |
(204) |
(75) |
| Taxes and licenses fees |
(5) |
(9) |
(19) |
(28) |
| Total |
(512) |
(435) |
(1,631) |
(1,203) |
General administrative expenses
These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in Brazil. The costs have increased by $51,000 in Q3 2021 compared to Q3 2020 as they include an additional 36 administrative employees, with professional headcount increasing from 20 in Q3 2020 to 56 in Q3 2021 to support the Company’s growth and due to incentive compensation. The Company had 47 administrative employees in Q2 2021.
Legal, professional, consultancy and audit costs
Legal and professional fees include legal, professional, consultancy fees along with accountancy, audit and regulatory costs. Consultancy fees are consultants employed in Brazil, such as accounting services, patent process, lawyer’s fees and regulatory consultants. The costs in Q3 2021 are $26,000 lower than Q3 2020 mainly due to audit cost reduction and Brazilian Real devaluation against Canadian dollar.
IT/Software expenses
IT/Software expenses include software licenses such as Microsoft Office, CRM and enterprise resource planning (ERP). In Q3 2021 expenses were $82,000, an increase of $56,000 on Q3 2020 due to an increase in the number of software licenses used by the Company.
Taxes and licences
Taxes and licence expenses include general taxes, product branding and licence costs. In Q3 2021, expenses were $5,000 compared to $9,000 in Q3 2020.
Share Based and Bonus Payments (Non-Cash Event)
These costs represent the expense associated with stock options granted to employees and directors and non-cash bonuses paid to key management.
Share Based Payments costs in Q3 2021 represent the expense associated with stock options granted to employees as part of the Company’s long-term incentive programme. These are measured under the Black-Scholes Model.
Q3 2021 Results Conference Call
The Company will host a conference call on Wednesday, November 24, 2021 at 09:00 am Eastern Time, to discuss Q3 2021 results and provide an update. Subscribe using the link below and receive the conference details by email.
The questions can be submitted in advance through the following link: https://bit.ly/Q3-2021-QuestionForm
The Company’s first quarter financial statements and related notes for the period September 30, 2021
are available to the public on SEDAR at www.sedar.com and the Company’s website at www.investor.verde.ag/.
Investors Newsletter
Subscribe to receive the Company’s monthly updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The most recent edition of the newsletter can be accessed at: https://bit.ly/InvestorNL-October2021
About Verde AgriTech
Verde is an agricultural technology company that develops and produces fertilizers. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable for farmers. We work to improve the health of all people and the planet.
Cautionary Language and Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.
For additional information please contact:
Cristiano Veloso, President & Chief Executive Officer
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.supergreensand.com | www.verde.ag
