Sigma Foods SAB

Good afternoon everyone, and thank you all for joining us today.

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 Roberto Olivares, Sigma's CFO. I will provide a brief update related to Alpha Sigma's transformation and Roberto will discuss Sigma's results. The second quarter was marked by a pivotal moment on April 7. This was the first trading day of Alpha Sigma as a pure plate packaged food company. Over the last 12 months, we have witnessed a substantial improvement in the company's valuation, narrowing the gap against international branded high-protein food peers. This positive trend has been supported by the complete simplification of Alpha's corporate structure, solid operating performance, and rapidly growing recognition as a consumer-focused company. We are also excited to see our full focus on Sigma being reflected in a formal transition to consumer staples within the global industry classification standard and an expanding consumer specialized sales side coverage. To further highlight our new identity, preparations for a corporate rebranding that will redefine the Alpha name and ticker are well underway. Once completed, we will call an extraordinary shareholders meeting to obtain the necessary approvals and implement these changes. We look forward to continuing this rewarding journey by raising awareness of Alpha Sigma as a highly attractive investment alternative in the global food sector. I will now turn the call over to Roberto to discuss Sigma's results.

We are pleased to once again deliver consistent results driven by the disciplined execution in the current environment of global uncertainty. There is widespread low consumer confidence resulting from various geopolitical issues and economic concerns affecting sentiment. Scale, diversification and business culture have played a key role navigating this year's highly fluid environment. Our multi-segment brand portfolio, multinational footprint, multi-channel distribution, and global supply chain are some components of our business model that mitigate risk in volatile conditions. Our teams have done a remarkable job of leveraging Sigma's unique strengths to stay ahead of consumer needs, while adapting swiftly to remain aligned with expectations. The positive sequential momentum observed in second quarter sales, comparable EBITDA and comparable EBITDA margin expansion give us confidence in our ability to overcome short-term headwinds and continue advancing in all regions. Implicit in this positive EBITDA margin trend are targeted actions and core capabilities that enable us to counter higher-than-expected protein input costs, primarily turkey, which is being affected by avian flu. It is important to highlight that turkey price reference in the United States and Europe were more than 50% higher year-over-year during second Q25, and remain subject to outward pressure. To further illustrate the cost headwinds we have faced this year, our largest region, Mexico, has effectively offset more than $200 million associated with higher raw material costs year-to-date. As reference, this figure is equivalent to 66% of Mexico's accumulated EBITDA. In sum, similar efforts to address raw material cost pressures across all regions have contributed to delivering the second highest accumulated comparable EBITDA in SGMA's history, $468 million. More importantly, consistent with our full-year guidance, we remain focused on sustaining this positive sequential trend into the second half of 2025. Moving on to key highlights per region. Starting with Mexico, the region posted an outstanding 12% currency-neutral sales growth with resilient volume. as targeted revenue management actions and other initiatives advanced during the second quarter to address cost pressures. Even so, peso denominated EBITDA was down 5% versus second Q24. This was primarily due to softer demand in the food service channel and a product mix impact in other channels. Next, The United States achieved record quarterly volume and revenues driven by national and Hispanic brands, with EBITDA of 56 million, the highest second quarter figure in the region's history. We were pleased to see resilient performance in Hispanic brands despite the rise in immigration-related events during the quarter, which caused certain disruptions in specialty store traffic and operations. This is supported by the growing penetration that our Hispanic brands are achieving across complementary mainstream channels. A final comment related to the Americas. Our Latin America region reached all-time high currency neutral revenues, driven by volume and prices increasing 1% respectively. By contrast, EBITDA was down 19% in local currencies, reflecting persistent raw material cost pressures and lagging operational effectiveness relative to other regions. On an absolute basis, most of this EBITDA reduction was concentrated in Costa Rica and the Dominican Republic. Targeted revenue management initiatives and additional margin recovery efforts are on the way. In Europe, currency neutral revenues were flat year on year as higher prices offset a 2% decrease in volume associated with the residual effects of the torrentium plant flooding. The temporary plan to distribute production across other plants and trusted co-packers is helping mitigate most of the short-term impact on volume, which is a key area of focus for us to maintain a healthy presence in the market. At the same time, the European team is working diligently with multiple parties involved in obtaining reimbursements for the flood damages. and putting together a comprehensive plan to recover the lost capacity in Spain. The second quarter benefited significantly from our progress in the damage reimbursement process. EBITDA included a non-recurring gain of 68 million euros, comprise of 56 million euros for property damages, and 11 million euros for business interruptions. In total, we have received 88 million euros since the unfortunate floating event in the fourth quarter of 2024. Insurance reimbursements will be the main source of funding for our permanent production recovery projects in Spain. As recently announced, these projects involve building a new package meat plant in Valencia, with an estimated investment of 134 million euros, and expanding capacity at our most modern facility, La Boreba, with an estimated investment of 23 million euros. These investments are designed to recover production capacity, while reinforcing competitiveness and building upon profitability improvement efforts in the region. resuming normal operation in Spain is a priority, as is continuing to expand our underlying EBITDA margin in Europe. This concludes my comments by reading. Regarding our financial position and select cash flow items, we maintain a strong consolidated net debt to EBITDA ratio of 2.6 times at the close of the second quarter. Looking at our year-to-date change in net debt, net working capital and CAPEX represent the largest uses of cash. Notably, investments in net working capital decreased significantly quarter on quarter, while CAPEX deployment accelerated as planned. Lastly, Alpha Sigma shareholders received dividends totaling $84 million during the second quarter, which were aligned with dividends paid by Sigma to Alpha in the same period. As we move into the second half of the year, we remain focused on executing our priorities, effectively addressing higher than expected raw material cost pressures. meeting guidance expectations, and accelerating the recognition of Alpha's new identity centered around SIGMA. We are excited about the opportunities ahead and remain committed to delivering value for all our stakeholders. Let's open the call for questions. Please, Hernan.