Fertilizantes Heringer SA

BOVESPA:FHER3

Earnings Call Transcript 2018-Q2

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. At this time, we would like to welcome everyone to Fertilizantes Heringer's Second Quarter 2018 Earnings Conference Call.

Today, with us we have: Mr. Carlos -- Dalton Carlos Heringer, CEO of the company; and Mr. Rodrigo Bortolini Rezende, CFO and IRO for the company. We would like to inform you that this event is being recorded. [Operator Instructions] This event is being simultaneously webcast through Heringer's IR website at www.heringer.com.br/ir and on the MZiQ platform, where the slide presentation is available for download. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of the company'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 the company and could cause results to differ materially from those expressed in such forward-looking statements.

Now, we will turn the conference over to Mr. Heringer, Fertilizantes Heringer's CEO, who will start the presentation. Mr. Heringer, you may begin the conference.

[Dalton Heringer, executive]

Thank you, very much. Good morning, everyone. For those who are following up in the earnings presentation of second quarter 2018, we'd like to let you know that this quarter, we had major challenges like a truck driver strike that was really hindrance on our deliveries for some time. And for the second quarter, in the past, our outlook was quite more positive than what actually happened. We're going to give you further detail on this over our presentation and will be sharing our outlook for the second quarter. For the purposes of the company, this is not so strong, but for the second half of 2018, the outlook is quite more positive considering the crop profile of the company and also the retail efforts by the company, and also owing to the progress we've made with our specialty products.

For those who are following our presentation, we will begin now addressing the Brazilian fertilizer market. The Brazilian fertilizer market was highlighted by this reality in the second quarter, in which up to April, deliveries were a lot higher compared to the prior year. The month of May, with the truck drivers' strike, the impact was very strong with a dramatic reduction. This reduction was lessened already with the deliveries made in the month of June. So if you think about the quarter as a whole, the drop in deliveries in the industry was 3.2%, moving from a level of 2017 at 6,714,000 tons to approximately 6.5 million tons, a drop of 3.2%. If you think about the first half of the year, the drop was slightly milder at 2.3% from a level of 14,182,000 tons to 12,834,000 tons.

Like I said before, it was really a very strong impact in the month of May. In the month of July, this impact was slightly milder. In our presentation for the year, we expect to have a similar market in 2018 compared to that we had in 2017. As a result, once we have deliveries within the first half of the year at lower levels compared to last year, at the end of the day, the second half of the year is -- we'll be more squeezed, so to speak, in terms of deliveries.

Soybean, corn, orange, cotton, all these crops in Brazil are really having price behaviors that encourage farmers to stick to their fertilization practices, so we expect to see a very favorable level [ of ] fertilization, operations and sales in the second part of the year.

Moving now to local production, now we are on Slide #4. There was a very significant drop in production over the second quarter of 2018 in the local production, domestic production of raw materials. The domestic production moved from 2,085,000 in the second quarter of 2017 to 1,916,000 now in the second quarter of 2018. This reduction was more visible in the production of nitrogen, particularly at Petrobras with urea production in the North East of Paranaguá plant. And there was also a downtime, an unscheduled stoppage in the production of the only potassium plant in Brazil in Sergipe State, and therefore, production altogether went down in the -- 8.1% in the second quarter. As for the first half of the year, the drop was slightly lower from 4,022, 000 tons to 3,775,000 tons now in 2018. So for the year, we don't expect to see such a steep drop as we saw in the first half of the year at 6%. We expect to see some recovery in production, at least, in some of these raw materials throughout the year in terms of domestic production.

What about imports? On Slide #5, we show that both in the first half of the year and in this quarter, there was a dramatic drop in imports in this timeframe. In the quarter, the drop was 2.2%, moving from 6,424,000 tons to 6,285,000 tons, a drop of 2.2% this quarter. As for the first half of the year, the drop was much higher, 7.7% in imports. A level of nearly 12,000 tons to slightly more than 11,025,000 in the first half of 2018 from 12,000,000 in the first half of 2017. When it comes to supply, if you take into account, deliveries, sales already performed, domestic production and imports, this scenario of supply for the second half of the year is very well adjusted, bringing the opportunity which we already perceive of significant improvement in our margins. This reality of margins already perceived in new sales would certainly improve our results starting the third quarter already and even more strongly in the fourth quarter, if you take into account the current margins that new sales of fertilizers for consumers are taking place. In terms of raw material price, this quarter, if you take into account a significant consumption level that is happening worldwide in terms of fertilizers, we have consistent increase, basically in the first core nutrients, nitrogen, phosphorus, and potassium.

So on Slide #6, if you're following us, we have this chart showing the main raw materials for each one of those nutrients, in this case, the nitrogen, urea, potassium chloride, and for phosphorus MAP. All these 3 products consistently showed high levels over this quarter and this did put pressure on prices, therefore reducing the margins in the second quarter. Combined with that, as Rodrigo will be mentioning later on, in this time frame, we had the strike, the truck drivers' strike and it also put pressure on freight costs. Therefore, adding a third driver to the previous factors and bringing these high levels in terms of the real/dollar rate this quarter. So these factors basically led to a drop in margins that we reported in the second quarter. But as I'm saying right now, we already see a significant reversal starting June in terms of new sales with much better margins compared to the margins that we reported in May, from January to May, more precisely, which were very poor at that time.

So moving forward with our presentation, now more specifically, let's talk about Heringer's delivery and performance. In the second quarter or after the -- this is a quarter that has strong deliveries for soybean. The company has a crop distribution profile which is quite diversified, and as a result, specifically in the second quarter, considering that soybean is the major crop when it comes to fertilizers consumers. So because soybean is not so strongly representative in Heringer compared to the rest of the industry, therefore the result is slightly lower compared to previous quarters. So at Heringer, we had a drop of 5% in deliveries from a level in Q2 2017 of 761,000 tons to 723,000 tons, and the market, during the same period, like we said before, went down 3.2%.

Deliveries by crop were very close to the reality in 2017 with a slight increase in soybean, approximately 4% in corn, a dramatic drop in coffee. However, when it comes to the first quarter of this year, basically, our purchases were concentrated in coffee. So in the second quarter, these purchases for coffee didn't happen. But we had some in the second quarter. So this quarter, we had a significant drop for coffee, but when compared or if compared to the second quarter of 2017, and the reason being, that we purchased it in the first quarter of 2017 were more concentrated, so it didn't have purchases for coffee in the second quarter of this year compared to last year. So the drop reported this quarter is very much related to this reality or seasonality of purchases in 2017 vis-à-vis 2018. And the drop for our agricultures is something temporary. We believe that basically fruits, vegetables, we believe they will be a lot more favorable in the second half of the year. April, May and June of 2018 were very dry months. And in late July, we are beginning to see some regions in Brazil starting agricultural rainfall. And in August, we expect to see a more normal climate condition. So some regions, who have been without rain for 50 or 40 days, are already beginning to show rainfall, and therefore, we're going to have a stronger move in our sales, starting from now on.

What about the first half of the year? As a company, we'll have a lower drop compared to the market. Our delivery volume went down 1.8% from 1,617,000 tons to 1,588,000 tons. During this period, the market had a higher drop, therefore, going down 2.3%. If you think about a breakdown by crop, soybean for instance, corn did not show significant changes compared to the first half of 2017. When we speak of coffee, sugarcane, and other cultures, they all reported slight drops. But as I'm saying right now, there was a very strong drought this period, and this is why part of these purchase will be taking place as of July and August.

Continuing our presentation -- our slide presentation, let us give you more information on the company's specialty products. The reduction showed in the first half of the year compared to the first half of 2017 were very strong. However, the drop in the margin of specialty products, particularly in this period did not happen at the same rate. There was a lower drop in margins for specialty products compared to our conventional product line. There was a drop, therefore as a percentage in the quarter in terms of volume of specialty products, this was stronger. For instance, a drop of 6.2% compared to other conventional products of minus 4%. There was a stronger drop in terms of volume of specialty products, however, as I'm highlighting right now, the drop in margins behaved differently. The drop was not so sharp in the margins of specialty products just as we saw a drop in conventional products. The company has been managing to take into account the agricultural scenario. Farmers are really bringing a lot of benefits. Productivity is higher, and this is acknowledged by our customers. And this has given the company the opportunity of not having to work with so many discounts, just as we had with conventional products. So specialty products are managing to maintain better margins and for the rest of the year, we'll expect to have something closer to the figures of 2017 compared to what we saw in 2016. In 2016, agricultural prices in general were even more favorable dollar-wise. So almost 49%, or better saying, 49% of specialty products in the total sales portfolio. Last year, the level was 36%, and possibly, we will get close to this level, maybe slightly lower, close to 45% for the current year if we consider the full year.

So now I would like to thank you for being with us. And now I'll give the floor to Rodrigo, who will continue our presentation. Thank you.

[Rodrigo Rezende, executive]

Good morning, everyone. Thank you, Dalton. Good morning, everyone, for joining us today. Let us talk now about the company's financial results for the second quarter and first half of the year.

Let us continue our presentation now on Slide #11. And beginning to address the company's volume, which went down 5% in the second quarter vis-à-vis the first quarter of the previous year -- the second quarter of the previous year. But whenever we address financial results, it's important to highlight the impact of nonrecurring events, for instance, the truck drivers' strike, the impact on the company's earnings and also the impact on the fertilizer industry. This event, which lasted approximately 30 days between the month of May and June, is a nonrecurring event. As -- although, fertilizers are not perishable, this event distorted, so to speak, the dynamics of the sector therefore affecting the company's margins and also peers in the market. Just for your information, up to April, the Brazilian fertilizer market had increased approximately 25% vis-a-vis April in the previous year, a good barter ratio for fertilization in growing crops, particularly, soybean. However, with the truckers' strike, there was a significant drop in the deliveries of fertilizers in the month of May of approximately 27% compared to May 2017. As a result, in the first 5 months of the year, the market, which had been growing approximately 3.5% up to April, had an accumulated drop of 4%. In June, there was a slight recovery also of 4% in the volume delivered, and therefore, the market had a smaller drop, which is what happened during the first 6 months, totaling 2.3%.

So this is one of the reasons why the company believes that the fertilizer market is not expected to grow over 2018. In the first quarter, we expected to see a market growth of 2% and today, owing to the impact of the truck drivers' strike, the dynamics of the industry and also due to the high prices of raw materials of fertilizers that are denominated into US dollars, the company has [ resulted in ] the numbers of the market from 2% growth to no growth for full year 2018. For the company, more specifically, the volume delivered was 723,000 tons vis-à-vis 761,000 tons in the second quarter of last year, a drop of 5%. And in the first half of year, although the company's volume decreased less than the market volume, the market went down 2.3% and the company reported a drop of 1.8%. In spite of that, there was a loss in volume and revenue expected by the company, particularly in the second quarter of 2018, owing to this nonrecurring event, which is the truckers' strike. As a reminder, the impact of the strike on this industry that delivers 100% fertilizer by truck is quite an impact and in terms of projection for GDP growth affecting several other industries. And there was a drop in the projection for growth of the -- of GDP to 1.5%. The company's net revenue totaled in the second quarter BRL 885 million, higher at 9% than BRL 814 million net revenue in the second quarter of 2017. As to the first half of the year, the net revenue also went up from BRL 1.8 billion last year to BRL 1.9 billion in the first quarter of 2018, a high of 6%. Despite a drop in volume, net revenue went up. And the reason why we had a higher net revenue was twofold: First, we had a higher price of fertilizer raw materials in the first half, vis-à-vis, the first half of 2017; and also, a higher average exchange rate in the same period. And therefore, prices of fertilizers that are denominated in BRL went up year-on-year. So in our case, in the second quarter, the price of fertilizers by ton was BRL 1,225 vis-à-vis BRL 1,070 in the same period of 2017, a high of 14.5%.

Gross profit was much lower than the same period of 2017. In the second quarter, more specifically, totaling BRL 50 million, or 64% lower. And last year, it totaled BRL 42 million. In the first half of the year, gross profit was BRL 83 million, a reduction of 50% vis-à-vis BRL 168 million in the first half of 2017. Gross margin was very poor, 1.7%, well below the 5.2% achieved last year in the first half of the year. In the first half of the year, it was 9.2%, so a drop of 50% in the first half of this year. And now, in the first half of the year, 4.3% or half of what it was in the first half of 2017.

As the SG&A expenses, let's talk about freight and commission first. Freight and commission in the second quarter totaled BRL 48 million, 4.2% of net revenue whereas in the second quarter of 2017, it totaled BRL 38.4 million or 4.7% of net revenue with a slight reduction. In the first half of the year they totaled BRL 89 million or 4.6% of net revenue, and in the first half of last year it totaled BRL 87 million or 4.8% of net revenue. So there was an increase in the first half, an absolute increase in freight, but an increase in net revenue, owing to higher dollar-denominated prices of fertilizer raw material, a higher average exchange rate reflecting in the price per ton in BRL higher than the same period of the previous year. Therefore, net income -- net revenue went up so the relative impact was eventually lower.

SG&A expenses, excluding freight and commission went down 9%, BRL 51 million in the second quarter, vis-à-vis, BRL 56 million in the second quarter of 2017 or 5.8% vis-à-vis 6.9% of net revenue in 2018 and 2017, respectively. In the first half of the year, there was an increase of 4% at BRL 107 million vis-à-vis BRL 102 million in the first half of 2017. However, there was a reduction -- a slight reduction vis-à-vis the net revenue, which went up at 5.5% vis-à-vis net revenue this year vis-à-vis 5.6% in 2017. EBITDA in the second quarter of 2018 was negative at BRL 64 million lower than the second quarter of last year, which was negative at BRL 39 million. So the EBITDA margin was negative of 7.2%, whereas, last year it was 4.8%. In the first half of 2018, EBITDA was negative at BRL 92 million, also lower than last year's EBITDA, which had totaled, but it was stable, a slight positive at BRL 6 million.

Net financial expenses in the second quarter was BRL 186 million, far superior than the second quarter of last year of BRL 97 million (sic) [ BRL 98.6 million. ] This comprises of net interest, discounts granted, expenses related to APV amounting to BRL 41 million, negative exchange variance of BRL 219 million, hedge revenues BRL 63 million (sic) [ BRL 73.4 million. ] In the first half of the year, net financial expenses also went up, totaling BRL 220.6 million vis-à-vis BRL 120.6 million in the first half of 2017, an increase of 83%, mostly affected by the strong depreciation of 17% in the second quarter. This is comprised of net revenue, discounts granted, net interest, BRL 64 million. Negative hedge variation of BRL 223 million and hedge operation revenue amounting to BRL 67 million. Therefore, the net income was negative in the second quarter at BRL 277 million, lower than BRL 100 million in the second quarter of last year. Also during the first half of the year, net income was negative, totaling BRL 324 million, much lower than the negative net income of BRL 93 million in the first half of last year.

Please note that for comparison purposes, deferred taxes, BRL 105 million was not included in this first half of the quarter in the same way that they were in the first half of last year with the deferred taxes coverable. Should they be included, the net income of the second quarter would have been not BRL 277 million negative but BRL 172 million negative. Likewise, in the first half of the year, rather than BRL 324 million, there would have been BRL 219 million. With regards to financial risk management, Heringer makes use of hedge in order to mitigate foreign exchange risk, on top of its dollar-denominated liabilities due to the raw material inventory, 75% of fertilizers used in Brazil in the imported products. And in June 30, 2018, the company held a total hedge position of $201 million, involving NDF operations average rate of BRL 3.66 and swap BRL 3.87 average rate. Also on June 30, the company had no covenants. The company doesn't have any kind of covenant.

Now please, let us turn to Slide #12. Let us talk about distribution and production of SSP and the temporary shutdown of this plant. The fertilizer distribution, the company during the first half of the year, had a negative EBITDA of BRL 86 million, however due to the temporary shutdown of SSP plant, we had a negative EBITDA of BRL 6 million, therefore performing a negative EBITDA of the company in the first half of the year of BRL 92 million vis-à-vis a positive EBITDA, like we said, of BRL 6 million in the first half of last year. So the SSP plant and deferred asset had a temporary shutdown. But it has adequate maintenance level, so the company can resume the activities as soon as possible should we have a decision or an even more favorable decision. In the month of May, or in the second quarter, we had a decision at a trial court partially favorable determining a new licensing with [ Parish, ] EIA/RIMA and also a public hearing to resume the operations of the SSP plant, which I said is a temporary shutdown. And the company also had a conviction amounting to BRL 500 million of collective damages. We had already mentioned this in material information. And at the same time, this was already restated to BRL 1,331,000, and also this provision was posted in the first half of the year.

Let us talk about working capital now on Slide 13. The company's working capital reflects the seasonality of the business. The recommendation is always to make a comparison with equivalent quarters in order to better understand our business model. And given the strong seasonality, we recommend analyze the company on an annual basis. Like Dalton said in the beginning, with a truck drivers' strike, there was a reduction in the volumes delivered in the first half despite the maintenance or the size of the market expected by Heringer to 2018. So we expect to see a stronger concentration of deliveries in the second half of the year. In the first half, therefore, we maintained the market at 34.4 million tons projected for the year. 37% of the volumes was expected to be delivered and 63% of the volume to be delivered in the second half in a very concentrated manner. Please bear in mind, that in the last 5 years, the average seasonality in the industry was 40% in the first half and 60% in the second half. What about working capital? Accounts receivable days closed at 39 days in the second quarter, under 42 days in the second quarter of last year. And this reduction stands from a stringent policy -- credit policy of the company combined to the business model with a lot of focus on retail yield and concentration in big customers. In the last 4 years, we had a very [ low age of units than what ] we expect for the current year. Inventory days totaled 11 and 77 days, excluding events from customers, which was very significant in the second quarter. And if we compare to the second quarter of 2017, inventories were 47 days, but also excluding events from customers, physical inventory at 93 days in the second quarter of last year. This year, there was more advance from customers for grain, particularly for soybean in the second quarter. Accounts payable days including FINIMP closed the second quarter at 116 days lower than 200 days in the second quarter of last year but still in line with the quarter -- previous quarters maintaining working capital days.

Now on Slide 14, let us talk about cash flow. For instance, when you consider the negative income before tax, in the second quarter, it was negative BRL 262 million. We had expenses with no cash effect, totaling BRL 142 million, basically concentrated in exchange variation and unrealized interest. There was an increase in asset accounts, putting pressure on cash, increasing inventories, basically BRL 182 million. And we also had an increase, a significant increase in liabilities accounts totaling BRL 339 million, basically concentrated in advance from customers. As a result, cash flow from the company's operating activities was positive, totaling BRL 48 million in the second quarter. Investments amounting to BRL 3.3 million and free cash flow positive in the second quarter totaling BRL 35 million. Cash flow from financial activities at BRL 55 million, and the company's cash moved from BRL 80 million to BRL 60 million by the end of the quarter.

As for the company's ownership breakdown, Heringer is the only fertilizer company listed at B3. It is controlled by: Heringer Participações, the controlling group, which holds 51% of the company; free float of 29%; OCP holding 10%; PCS Nutrient 9.4%; free float 99% Brazilian, 1,882 investors and 1% for investors -- 13 investors. We are very diversified for 50 years in the fertilization market. This company has a delivery profile by crop that is the most diversified in Brazil. Last year, soybean accounted for 43% of fertilizer demand in Brazil. And at Heringer, it was only 18%. Heringer focuses on other crops as well. About 30% of the volume is ear-marked to approximately 70 crops, including pasture, cotton, vegetables, wheat, orange, among others. And the company's profile is very spread, reaching the whole Brazilian territory with 35,000 customers served in 2017.

Thank you very much for your time, and now I give the floor back to Dalton. Thank you very much.

[Dalton Heringer, executive]

Thank you, Rodrigo. We are just about to conclude our presentation. In terms of outlook, the months of June and July were shy in terms of new sales. However, like we said before, margins showed a significant improvement and considering the climate change already observed in several regions with rainfall beginning to happen, we'll have some agricultural momentum now and also the boost in sales beginning for several crops. And in this stage, a little bit more move in terms of deliveries and new sales. We mentioned this reality more than once today with a better margin outlook. As to consumption for the year, like we said before during today's presentation, actually our expectation for margins were better considering the increase in consumption that we envisage for the year. And today, it seems more adequate to work with a horizon for 2018 with similar scenario to 2017. And agricultural prices for grain are doing well with soybean, corn, so it is possible, despite higher fertilizer prices and considering higher margins realities up to now. And also moving to our third quarter with higher margins, considering foreign-exchange variation, which is also higher but despite of that, consumption was close to the figures reported last year.

In the current year, we expect to have the second largest harvest in the year, slightly smaller than last year's due to the corn harvest or the winter crop corn slightly lower than last year's owing to climate factors, but pretty much offset by higher prices compared to last year. So if you think about the reality of distribution or a breakdown between the first and second half, we expect to see a 37% and 63%, respectively. So if you think about the outlook for national production and inventory, in the second half of the year, we expect to see a very good adjustment margin-wise. Roughly speaking, the idea of today's presentation, this is what we have basically. And should you have any questions, perhaps we can move now to the question-and-answer session. Thank you very much.

[Operator]

[Operator Instructions] The first question is from Thomas Budoya from Itaú BBA.

[Thomas Budoya, analyst]

My first question is about freight. We saw the strong impact caused by the strike, but what about going forward? What changes for the fertilizer chain, the industry and the impact on you? There is always new freight regime. That's my first question. And the second is about inventory. We're just about to get into the second half of the year with very much concentrated sales. I'd like to better understand the inventory approach for the second half of the year in order to benefit from this volume and improve your performance for the full year.

[Dalton Heringer, executive]

Thomas, thank you for your question, amazing questions. It's a great opportunity to talk more about freight. The reality of the fertilizer industry all this strong impact, it's true due to the rules of logistics and trucks to nearly all fertilizer deliveries. For the purposes of Heringer, the sales reality with long distances, this is not so common compared to other companies, Thomas. We have more regional deliveries, broken down different crops and the current freight tables when it comes to the market or prior to the truckers' strike, this is far more sensitive to long distance compared to short ones. The government agency that works on those price tables, AMTT, is just about to issue a new review of this table, trying to adapt the markets' reality to the current status, so we can have a better or more adequate freight scenario. And in the industry, I guess we're trying to show, legally speaking, that it is impossible to have those price table. So when it comes to the judiciary branch, we have to work as a sector and also, the administrative discussion with the agency that is responsible for this price list, AMTT, trying to bring those freight reality closer to the market's reality, so the impact of the company going forward are very little. Overall speaking, freight impacts have already happened in July -- in June. So for July and August, the impact was relatively small. We saw in the news some articles about some of our competitors with numbers much higher compared to the impact that we expect to see at the company. Now since the freight price list began to be drafted, the new freight conditions that are being addressed for new sales as the margins, like I said before, we already have adequate costs with significant improvement. Answering your second question now, in terms of inventory, we've been addressing this market future in a very controlled manner, though considering the current picture, last year, our inventory scenario was slightly superior to today's but nothing significantly lower. So lines at ports today are not so long. Last year, queues were longer than today, and the company's sensitivity to margin was quite high. So volumes, margin, we tend to joke, margin about volume, none of this works for us. So we're trying to be better gauged so we can have supply and volume with good margins so we can have a significant recovery in our EBITDA this year. The negative EBITDA in the first half of this year certainly will be at far more positive level, even with a clear reversal from negative to positive still within the current year. So new margins will allow us to make it possible. Last year, for instance, we closed at almost BRL 100 million EBITDA compared to almost BRL 5 million in the first half of the year. And last year, there was no margin recovery, not a significant margin recovery as we feel this year in the second half. So this is the company's expectation. This is what we're working with. In terms of inventory, like I said in our presentation, 77 days excluding advance from customers, that will be in June 30 against 93 days. So just highlighting, we have lower inventory, but working to have supply that considering current margins will really bring significant improvement to the company's earnings already in the second half of the year.

[Operator]

[Operator Instructions] The next question is from Fernando [ Dentis, Individual. ]

[Unknown Shareholder]

Dalton. I'm an individual shareholder of your company. And in recent months, maybe in the last 6 months and even owing to several news in the media, it was -- the news about Heringer and relationship with other players. And considering that result that was not so good for the company, what about any existing conversation? Is the company trying to have some capital inflow? As an investor, I'm very worried about this loss -- particularly the increase in the [ GAAP. ]

[Rodrigo Rezende, executive]

Thank you for your question, Rodrigo speaking. The company and its controlling shareholders are frequently analyzing the possibility or other alternatives to invest related to the business. Basically, it always is in contact with potential investors. Remember there was a lock-up up to March this year. This is public. And today, we no longer have this lock-up. But the company always identifies opportunities to the future of the company. So the controlling shareholders tell the market and the company that there is no kind of document -- binding document with any potential investor at the moment involving the company or any stock issued.

[Dalton Heringer, executive]

Dalton speaking. Basically, I will repeat what Rodrigo said. Fernando, thank you for your question. Actually as a family, we are keeping our eyes open. The company has already been through several transformation processes. We are in the market for 50 years now. It was already a closed capital company with private equity. Basically, it's family and market, and in recent years, there were 2 strategic investors in the fertilizer market, which are part of our base now. So this highlights, what Rodrigo already said, the families always looking for the best alternatives and opportunities. And sure, we see anything to be made public, the company will certainly be disclosing this. So we're keeping our eyes open and analyzing and if there is any proper opportunity, we'll simply search for them and always bringing the market up to date.

[Operator]

Ladies and gentlemen, at this time, this concludes the Q&A session. I would like to give the floor back to Mr. Dalton Heringer for the closing remarks.

[Dalton Heringer, executive]

Once again thank you very much. This quarter was -- there was very strong impact on our results. It's important to say that for us, the second quarter is not really the most important quarter to us. The third and fourth quarter of the company, if you follow our track record, our operations, you know that the second quarter for us -- I mean, the second half of the year is really important to us. We've been managing to tackle all our challenges. Brazil has not been simple to manage. There was a succession of factors that are constantly putting us to the test, challenging all companies in the country. We are always keeping our eyes open to reality and pari passu considering any possibilities in order to bring perpetuity to the business and provide better remuneration to the company. So once again, thank you very much. We are doing everything we can in order to improve our results in the second half of the year and also to have a good performance for the full year. Thank you very much.

[Operator]

This concludes Fertilizantes Heringer's conference call. You may disconnect your lines right now. Have a good day.