Modeling Guide

Gross Revenue

The Company’s main activity is the processing, distribution and sale of grains (mainly rice and beans), sugar, canned fish, pasta, coffee and biscuits. Additionally, Camil also processes, distributes and sells other grains, including peas, chickpeas, lentils, popcorn and soy protein. In addition to other grains, on a smaller scale, the Company also generates electricity from rice husks, as well as selling rice oil, olive oil and providing irrigation, storage and grain drying services.

The history of volumes and prices can be found in the spreadsheets at the beginning of this section. The Company conducts its operations and reports its results in two segments: (i) Food Brazil: comprises operations carried out by units established in Brazil, separated into high turnover (grains and sugar) and high growth (fish, pasta, coffee and biscuits) , in addition to other recipes, such as the recipe for drying grains and products with higher added value; and (ii) International Food: comprises grain operations carried out by units established in Uruguay, Chile, and Peru and Ecuador, and to a lesser extent other high-value-added products. In the Brazilian Food Segment, a substantial part of sales is made in the Brazilian domestic market. In the International Food Segment, a large part of sales comes from exports from Uruguay and sales on the domestic market in Chile, Peru and Ecuador.

Taxes on sales and returns and rebates

ICMS is a state tax and is levied on our gross sales revenue at rates that vary between 0% and 20%, according to the type of product and the State in which that product is sold. In recent fiscal years, sales taxes represented around 7% of gross revenue.

Returns consist of products that we sell to our customers and that are returned to us in the event of damage or after their expiration dates. Rebates consist of discounts that we grant, on a case-by-case basis, only to our customers, according to negotiations that are normally based on the volume of products sold, and the quality and longevity of the relationship with each customer. In the last fiscal years ended, returns and rebates represented around 7% of gross revenue.

Net Revenues

The history of net prices by category can also be found in spreadsheets to support net revenue modeling. In view of net operating revenue, the Company depends mainly on activities carried out in Brazil, with the Company’s dependence on activities carried out abroad being lower.

In recent fiscal years, revenues from sales in the Brazilian Food Segment represented around 70% of net revenue from sales and services, while revenues from sales in the International Food Segment represented around 30% of net revenue from sales and services.

We highlight below the details of the dynamics by category:

Brazil

High Turnover

Grains: In recent fiscal years, the volume of grains in Brazil represented approximately 40% of the total. The Company’s main grain brands, in terms of volume, include Camil and occupation brands with regional relevance, such as Namorado (as of December 2018, with the completion of the acquisition of SLC Alimentos), Pop, Príncipe, Carreteiro and Che. The greatest representation is due to rice businesses, which in recent fiscal years represented approximately 35% of the total volume. The rice harvest occurs once a year, with harvest between the months of February and May. The Company processes a variety of different types of rice to attract more consumers and has a long-term relationship with rice suppliers with daily/weekly purchases at market prices. Regarding the volume of beans, this represented approximately 5% of the total. Beans have three harvests per year, which are harvested in March, August and November and have a history of price volatility. The Company has a long-term relationship with its producers, with daily purchases at market prices.

The Company also operates with other grains and ready-made lines sold, such as special grains, rice biscuits, ready-made product lines and other high-value-added products. The special grains are composed of peas, chickpeas, lentils, corn, soybeans and hominy. These products, despite having a very positive margin, have a smaller representation in revenue.

Sugar: In recent fiscal years, sugar volume represented approximately 25% of the total. Sugar is supplied through a long-term supply contract with volumes and market prices pre-agreed with a strategic supplier. The União brand is also present in the segments of organic sugar, sucralose sweetener, special sugar for cooking, cake mix, among others.

High Growth

Fish: In recent fiscal years, the volume of fish represented approximately 2% of the total. The Company has canned fish processing strategically located in Navegantes, Santa Catarina. Additionally, the Company produces sauces and pates derived from tuna and sardines for sale. The supply of fish for sale in the local market is made by a fragmented supplier base and complemented by imports. The Company’s main fish brands are Coqueiro (main brand) and Pescador (occupation brand).

Pastas: Leader in the pasta segment in Minas Gerais, Santa Amália joined Camil Alimentos’ brand portfolio at the end of 2021, introducing the Company to the pasta category in Brazil. The 2022 financial year (ended in February 2023) was the first complete annual financial year to record the volumes and results of the category for the Camil group.

Coffee: In 2021, Camil announced its entry into the roasted and ground coffee market in Brazil, with the Café Bom Dia and Seleto brands (occupation brands) and the launch of coffee with the highly renowned brand União. The launch and start of operation took place at the end of March 2022, with production strategically located in Varginha (MG). The 2022 financial year (ended in February 2023) was the first complete annual financial year to record the volumes and results of the category for the Camil group.

Biscuits: In 2022, Camil announced its entry into the biscuits category with the acquisition of Mabel, together with the licensing of the Toddy brand for cookies. The 2023 financial year (ending in February 2024) was the first complete annual financial year to record the volumes and results of the category for the Camil group.

International

Uruguay: in the last fiscal years ended, Uruguay’s volume represented approximately 25% of the total. Saman is the Uruguayan leader in rice exports. In 2022, the Company began a category diversification strategy for international operations, with entry into the high-end products market in Uruguay through the acquisition of the company Silcom.

Chile: In Chile, in the last fiscal years ended, the volume represented approximately 4% of the total. With the Tucapel and Banquete brands, the Chilean operation is focused on serving the local market. Tucapel works with different types of products in addition to its flagship product, rice. Among them, vegetables (beans, peas, chickpeas and lentils), risottos and rice biscuits..

Peru: In the last fiscal years ended, Peru’s volume represented 4% of the total. In Peru, the Company is present with Costeño, through the sale of various products, the main ones being white and special rice.

Ecuador: In 2021, Camil announced its entry into Ecuador, with leadership in the aged rice sales category in the country with the Rico Arroz brand by the company Dajahu. The 2022 financial year (ended in February 2023) was the first complete annual financial year to record the volumes and results of the category for the Camil group.

Cost of Goods Sold

The main inputs used in the production process of the Company and its subsidiaries are agricultural commodities, whose prices fluctuate depending on public agricultural promotion policies, seasonality of harvests and climate effects. Our sales and service costs therefore mainly comprise the cost of raw materials, which consist of paddy rice, beans, sugar, fish, wheat, coffee and packaging and auxiliary materials. Our cost of raw materials is the most representative cost of our cost of sales and services, representing approximately 85% of the costs of sales and services.

In recent fiscal years, the cost of sales and services represented approximately 75-80% of net revenue for the periods.

Expenses

Our operating expenses mainly include selling expenses, general and administrative expenses, equity income and other operating expenses.

Our sales expenses consist of shipping, marketing and other expenses directly related to the sale of our products, largely concentrating our variable expenses. In recent fiscal years, sales expenses represented approximately 10% of net revenue for the period.

Our general and administrative expenses basically refer to expenses with personnel, travel, fees and other general and administrative expenses, largely concentrating our fixed expenses. In recent fiscal years, general and administrative expenses represented approximately 5% of net revenue for the period.

EBITDA

EBITDA and EBITDA Margin are financial indicators used to evaluate the results of companies without the influence of their capital structure, tax effects, other accounting impacts without a direct impact on the company’s cash flow, and other unusual or non-standard items. are arising from its main operations. We understand that it is the appropriate measure for a correct understanding of the Company’s financial condition and performance. Over the last ten fiscal years, Camil’s EBITDA margin as a percentage of Net Revenue from sales and services varied between 8% and 11%, even in scenarios of economic slowdown and high inflation in Latin America.

Financial Results

The main financial expenses are interest on debt and exchange rate variations on commercial transactions in other currencies. The main financial income is income from financial investments.

Income tax and social contribution

In Brazil, taxation on profits includes income tax and social contribution. The provision for income tax (IRPJ) and social contribution (CSLL) is related to the taxable profit for the years, with the rates for IRPJ being 25% CSLL and 9% on taxable profit. In Uruguay the rate is 25%, in Chile 27%, in Argentina 35% and in Peru 29.5%, and in Brazil these results are taxed in accordance with MP 2,159-70/2001 and Law nº 12,973 /14.

The Company’s tax rate is impacted in some periods due to exclusions relating to the recognition of ICMS subsidies and payment of Interest on Equity, a measure initiated by the Company in December 2017.