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spk00: Good morning. My name is Hilda, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2022 Industrias Bachoco earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you for your attention. I will now turn the call over to Maria Gejaquez. Maria, you may begin.
spk01: Thank you. Good morning and welcome to Gachoco's third quarter conference call. We released our financials yesterday after market closed. If you need a copy of the release, please visit our website or request it from our investor relations department. This morning's call contains certain information that could be considered forward-looking statements regarding anticipated future events and performance. The statement reflects management current beliefs based on information currently available and are not guarantees of future performance and are based on our estimates and assumptions that are subject to risk and uncertainties, including those described in our annual report or 20S, which could make our current results defer materially from the forward-looking statement discussed in this call. Acceptance required by applicable law INDUSTRIALS BACHOCO UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE RATINGS, OR OTHERWISE. LASTLY, UNLESS THAN OTHERWISE INDICATED, THE AMENDMENTS MENTIONED IN THIS CONFERENCE WILL BE FIGURES OF 2022 WITH COMPARATIVE FIGURES OF THE SAME PERIODS OF 2021 IN MEXICAN PESOS. AS A REFERENCE, THE EXCHANGE RATE AS OF SEPTEMBER 30, 2022, was 20.13 pesos per us dollar here with me our our ceo mr rodolfo ramos and our cfo mr daniel salazar now i will give the call to mr ramos thank you maria and good morning everyone this third quarter behave according to the expected seasonality by showing lower margins compared to the first half of 2022 however
spk04: As we remain focused on efficiencies and sales mix, our overall results show an improvement versus the third quarter of 21. Our cost of sales continue to be negatively impacted by higher corn and soybean meal prices, both in U.S. dollars and in Mexican pesos. Those main raw materials alone show increases of around 20% versus the same period of 2021. During the third quarter of 22, in terms of poultry markets in Mexico, we observe a slowdown in demand, which is a characteristic of this time of the year. This effect puts some pressure on our net price compared to the first half of 2022. Despite that challenge, as a result of our commercial focus on sale, channel mix improvement and service, we were able to show better pricing when compared to the third quarter of 21. Regarding our other segments, we kept focus on operational efficiencies both in SASA and RIC Alimentos, and we consider we are heading toward the right direction. About our U.S. operation, during the third quarter of 22, we started to observe some slowdown on commodity markets particularly for white meat and low quarter prices. Despite those challenges, and by working toward efficiencies, we managed to keep delivering positive results. The aforementioned resulted in report sales with increase of 20.9% for the quarter and 24.5% for the nine-month period. when compared to the same period of 2021. While in terms of cost of sales, we showed increases of 20.3% for the quarter and 22.7% for the nine months of 2022. This led us to an EBITDA of $1,525.8 million with a margin of 6.2% for the third quarter of 2022 compared to the 1,127.4 million and 5.6% of the third quarter of 21. Challenging condition in terms of raw material costs has also required higher investment on working capital. However, our financial discipline allows us not only to cover those requirements, but also to maintain a healthy financial position. reaching a net cash level of $16,413.5 million, which will allow us to face potential uncertainties in the near future and to continue supporting our growth strategies. Now, Daniel will join us for a discussion of the financial results.
spk02: Thank you, Rodolfo, and good morning, everyone. As a result of the conditions I've mentioned before, our company's third quarter of 2022 net sales totaled 24,457.8 million, 4,228.8 million, or 20.9% higher than the 20,229 million reported in the third quarter of 21. Total cost of sales for the quarter was 21,189.7 million pesos, representing an increase of 20.3% when compared to the $17,619 million for the same period of 2021. In terms of the first nine months for the year, cost of sales increased 22.7% versus the same period of 2021. Gross profit for the quarter was $3,268.1 million, with a gross margin of 13.4%, which is higher when compared to the $2,610 million and 12.9% reported in the same period of 2021. For the first nine months of the year, we reached gross profit of $14,308.2 million with a margin of 19%. This amount is higher than the gross profit of $10,787.2 and 17.8% margin reached in the nine months of 2021. Total SG&A for the second quarter was 2,114.2 million, representing 8.6% of our total sales, which compares to the 1,790.9 million and 8.9% of the total sales achieved in the third quarter of 21. For the nine months of 22, we reported an SG&A of 6,236.7 million, or 8.3% of total sales, while in the nine months of 21, we reported 5,157.4 million, and 8.5% of total sales. Operating income for the third quarter of 2022 totaled 1,131.2 million, an operating margin of 4.6 percent, higher than the 738.4 million, and 3.7 percent margin reached for third quarter of 2021. Operating margin for the nine months of 2022 was 10.8 percent, compared to the 8.9 percent reached in the same period of 2021. our EBITDA margin was 6.2% for the quarter, an increase when compared with the 5.6% in the third quarter of 21. While the first nine months of the year of 22 and 21 EBITDA margins were 12.3% and 10.7% respectively. For the quarter, we had a net financial income of $116.5 million, and $38.6 million for the nine months of 2022, compared to the net financial income of $459.6 million for the third quarter of 2021 and $682.2 million for nine months of 2021. Our total taxes were $285.3 million for the third quarter, compared to the $380.6 million recognized in the same period of 2021. For nine months for the 2022, our total taxes were $2,117.9 million, higher than the income taxes of $1,733.3 million for the same period of 2021. All the above led us to a positive net controlling interest income of $972.1 million and 3.97% margin for the third quarter of 2022, compared to to the $843.8 million and 4.17% margin reported in the third quarter of 2021. For the nine months of 2022, net control and interest income totaled $6,072.7 million with 8.1% margin, which is higher than the $4,420.9 million, 7.3% margin of nine months of 2021. Going into our balance sheet, we kept a healthy financial structure with a net cash level of $17,415.35 million at the end of September of 2022, and this has allowed us to keep with our CapEx allocation plans, which showed an increase of 31.3% when compared to the same period of 2021. Thank you, and I will turn the call back to Rodolfo for final comments.
spk04: Thanks, Daniel. Now we are entering the fourth quarter, which historically is a good one in terms of molding salt. Particularly in the United States, we think that most of the negative impact of the slowdown of prices will be seen in the fourth quarter of 2022. In terms of cost, even when we have seen soybean meal prices starting to decline, There is a lot of uncertainties in this arena, so we will remain following closely those trends while being disciplined with our hedging policy. We will remain focused in serving all of our commercial channels and be close to our final customers and consumers, bringing high-quality products to their tables. Even when the near future can be volatile as a result of the macroeconomic uncertainties in the country in which we compete, we continue to focus on our growth plans. We have a very solid financial structure that enables us to support our projects and add value to our investors. In this regard, it is key for us to continue focusing on those things we can control while delivering positive results in terms of probability and growth. With that, we will now take your questions.
spk00: Thank you. We will now begin the question and answer session. If you have a question, please press 01 using your touchstone phone. If you wish to be removed from the question queue, please press 02. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press 01. And we have a question from Juan Ponce from Redesco BBI. Please go ahead.
spk03: Hola, Rodolfo, Daniel. Thank you for taking my questions. So we saw this morning reports on bird flu cases in Mexico State and previously in Jalisco. How much do these states represent of total supply and do you think it will be contained? And in the same context, what are your views on the government waiving importation requirements to stimulate supply? Thank you very much.
spk04: Yeah, the report of Evian Influenza wasn't just one wild bird. I think it was a falcon and that's it. And they found it, and obviously dead, and they discovered and was positive to avian influenza. But that's it. And there is no other reports. That was very close. That's in an area of the Jalisco State, and that's the report just in wild birds and backyard birds, not in the commercial. And all this... outbreaks are under control according to the CENACICA.
spk03: Okay, thank you very much. And what are your views on the government waiving importation requirements to stimulate supply? Do you think there is a risk in terms of sanitary regulations, et cetera?
spk04: Well, we and the whole industry is following the rules of the sanitary officials. So even if we subscribe the act, we are going to follow all the rules of all the measures to maintain the health of the industry in terms of diseases and all the risk that any importation can cause in Mexico. So Bachogo has a company, agreed to keep working with the actual regulations. And I think it's the same thoughts of the whole industry to keep the country in the same way in terms of of health and biosecurity.
spk03: Okay, thank you very much.
spk00: Thank you. Once again, for any questions, please press 01. At this moment, I show no further questions. I would like to turn the call back to you for any final remarks.
spk04: Okay. Thank you all for joining us this morning. If you have any further questions, please contact our investor relations area, who will be glad to assist you. Thank you very much.
spk00: Thank you. Ladies and gentlemen, this concludes today's conference. We thank you for participating. You may now disconnect.
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