Alpek Sab De Cv Ord

Good morning, welcome to Alpek second quarter 2022 earnings webcast. My name is Anton Fernandez and I am honored to assume my new role as Alpek investor relations officer. Today I have the pleasure of being joined by your CEO, Pepe Valdez, and our CFO, Jose Carlos Pons. This presentation is divided into two parts. First, Pepe and Jose Carlos will comment on Alpek's second quarter performance, recent events, and updated guidance figures. Afterwards, we'll move on to Q&A. Please note that the information discussed today may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to certain risks and uncertainties. Actual results may differ materially and the company cautions the market not to rely unduly on these forward-looking statements. Alpek undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd like to remind everyone that today's webcast is being recorded and will be available on our website at alpek.com. I will now turn the call over to Pepe.

Thank you, Anton. We're happy to have you as the new IRO. Good morning, everyone, and thank you for joining us today. I am very pleased to mention that in the second quarter, Alpek continued to navigate 2022 successfully. Margins were more robust than expected across all key products in our portfolio, which supported the company in achieving record quarterly highs for both comparable and reported EVDA. Let's begin with a review of the main topics we will cover today. First, Alpek significantly surpassed financial performance expectations for the second quarter, as José Carlos will review in greater detail later in this presentation. Then, we will discuss the conclusion of the OCTAAL acquisition and the added value to our portfolio. We will give an update on Corpus Christi polymers. Forward, we will cover the recent SBTI approval. And finally, we will provide revised 2022 guidance for the earnings report released yesterday. Let me provide some context for the second quarter results. These past few months have been marked by sustained inflationary pressures. Meanwhile, Asian integrated polyester reference margin averaged $410 per ton for the quarter, higher than expected, and only 2% lower than the previous quarter, with the spread between Chinese and Asian margins narrowing to $93 per ton. North American polypropylene reference margin, however, experienced an unexpected quarterly increase, averaging 39 cents per pound, 3% higher quarter on quarter due to tight market conditions. Also in North America, EPS average reference margin declined by 14 cents per pound during the second quarter due to higher raw material prices, but nonetheless remain at strong levels. At this point, Jose Carlos will take over and go into more detail regarding the specific impact of these changes on financial results.

Thanks, Pepe. And thank you all for being here with us today. I would like to highlight some of Alpek's main achievements during the quarter. Overall volume increased to 1.26 million tons. Record quarterly comparable levita of $369 million, with both the polyesters and plastic and chemical segments posting their highest quarterly figures ever. Leverage increases slightly to 1.2 times due to the octal acquisition. Delving deeper into volume, Alpek reached 1.26 million tons this period, 4% higher than in the previous quarter. This was due to the sustained high demand and of course the inclusion of the best business from Octalia. If we exclude the incremental volume from the recent acquisition, volume decreases slightly by 2% quarter on quarter and was flat year on year as a result of a scheduled maintenance at one of our sites. In the polyester segment, volume was 1 million tons, 5% higher quarter on quarter, largely to sustain high demand and the recently incorporated bed sheet and bed resin facilities from Octal. In plastics and chemicals, volume was 2% lower quarter on quarter due to the fact that the increase in EPS volume was offset by a slight decline in the polypropylene volume. Moving on to raw material price dynamics, average spot print crude oil increased to $113 per barrel, 16% higher than in the previous quarter, largely due to the effects of inflationary pressures. US reference paraxylene prices increased by 41%, much greater than the rise in crude oil. and in plastics and chemicals, propylene prices remain stable, averaging 61 cents per pound, a 4% decrease when compared to the previous quarter. Switching over to EBITDA breakdown for the quarter, We can see that the total comparable levy that reached $369 million, a record figure, and was 11% higher than in the previous quarter. This was primarily due to better than expected margins from our main products, as well as a strong volume across both segments. Reported levy that was $507 million, 11% higher quarter on quarter. This result also included a non-cash inventory gain of $80 million and a positive carry-forward effect of $73 million. If we look at results by key segments, Poliestra Compago Levita was $218 million, 13% higher quarter-on-quarter and 113% higher year-on-year, making this the strongest quarter ever for the segment. This was due to solid volume and resiliency of the Asian polyester reference margins, which remained higher than expected, averaging $410 per ton. Excluding incremental levita from the new pet business, polyester-comparable levita would have esteemed being higher than the first quarter. In plastics and chemicals, Compara Bolivar also set a new quarter record of $147 million, a 3% increase quarter-on-quarter and a 22% year-on-year. This was mainly due to increasing polypropylene margins stemming from limited supply, which led to tight market conditions, as well as stronger-than-expected EPS margins. With regards to free cash flow generation, networking capital investment increased by $238 million, largely due to rising raw material prices during the quarter. CapEx totaled $678 million and was mainly allocated to the hotel acquisition. This resulted in a negative free cash flow of $535 million, as record EBITDA was more than offset by strategic CapEx. Finally, I want to discuss the company's financial position during the second quarter. Alpex net debt increased to $1.78 billion, and last 12 months EBITDA also increased to $1.5 billion, resulting in a leverage ratio of 1.2 times net debt to EBITDA. That concludes my comments, and I will now turn the call back to Pepe.