Sigma Foods SAB

Good afternoon, and welcome to Alpha's third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session with instructions given at that time. As a reminder, today's conference call is being recorded. Now I would like to turn the call over to Mr. Hernan Lozano, Vice President of Investor Relations. Mr. Lozano, you may begin.

Good afternoon, everyone, and welcome to Alpha's third quarter earnings conference call. Further details about our financial results can be found in our press release, which was distributed yesterday afternoon, together with a summarized presentation. Both are available on our website in the investor relations section. Let me remind you that during this call, we will share forward-looking information and statements which are based on variables and assumptions that are uncertain at this time. It is my pleasure to participate in today's call together with Eduardo Escalante, Alfa's CFO, and Roberto Olivares, Sigma's CFO. As a reminder, we completed the spinoff of EXTEL during the second quarter. Thus, our discussion today will focus on Alpha at the parent company level, Sigma, and Alpec. Please refer to Excel's earnings report for figures and analysis of its operations during the quarter. I will now turn the call over to Eduardo.

Thank you, Hernan, and good afternoon, everyone. We greatly appreciate your participation today. Actions undertaken during the third quarter reflect important steps to, first, ensure the orderly transition of duties and continuity through a clear succession plan of our chairman of the board position. Second, further simplify our corporate structure via the reorganization of functions at the legal department. And third, advanced towards important financial conditions at Alpha, Sigma, and Alpec, all of which are required to complete the final phase of our transformation process. On the financial front, our consolidated revenues were down 14% and EBITDA declined 18% year over year, reflecting a significant difference in the standalone performance of our two remaining subsidiaries. Sigma benefited from record performance in the Americas and a much anticipated turnaround in Europe, whereas Alpec had another tough quarter marked by persistent industry headwinds. Lower average prices and volume in both of these petrochemical segments Segments resulted in a 34% year-over-year decrease in revenues. Moreover, EBITDA was down 59% year-over-year, reflecting weak reference margins for PET and expandable polystyrene, as well as the non-cash effect of hyperinflation in Argentina, and one-time costs associated with the plant closure. As part of the actions undertaken to streamline operations, Alpec announced the shutdown of a textile and industrial fiber production facility located in Monterrey, Mexico. This site has operated for more than 60 years. However, challenging conditions for the global fiber industry have impacted this asset's profitability over an extended period of time. with no near-term improvement in sight. Cash maximizing efforts are also ongoing. Alpec and its joint venture partners decided to pause construction of the integrated PTA-PET plant in Corpus Christi, Texas. The project was being impacted by inflationary pressures on construction and labor costs. driving this investment above budget. The partners are reviewing options to determine the best path forward. The site will be properly preserved so that construction may resume in the future. Networking capital optimization has also played a big role in Alpec's ability to maintain remarkable free cash flow generation despite this year's decrease in EBITDA. NETE, our petrochemical business, has decreased versus year-end 2022, driven by a recovery of $432 million in net working capital during the first nine months of 2023. I will now turn the call over to Roberto Olivares, Sigma CFO, to let him discuss the company's outstanding third quarter results and progress on strategic initiatives. Please, Roberto.