Alpek Sab De Cv Ord

Good morning and welcome to Alpex first quarter 2023 earnings webcast. We very much appreciate everyone's participation. I am Antón Fernández, Alpex IRO, and today I have the pleasure of being joined by our CEO Jorge Young and our CFO José Carlos Pons. This presentation is divided into two parts. First, Jorge and Jose Carlos will comment on Alpex's first quarter performance, footprint optimization, corporate governance, and revised CapEx. 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. ALPEC undertakes no obligation to publicly update or revise any forward-looking statements, whether it is 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 alpec.com. I will now turn the call over to Jorge.

Thank you, Anton. Good morning, everyone, and thank you for joining us. I would like to report that despite the challenging market environment during the first quarter, Alpek delivered a comparable EBITDA of $207 million that was in line with the outlook we envisioned. We also made progress in improving for asset footprint. through the rationalization of one of our polyester assets, strengthening our business accordingly, which we will review in further detail later in the call. Let's start by reviewing the main topics we will cover today. First, I will introduce some of the key highlights for the quarter and Jose Carlos will cover Alpex financial performance in greater detail a bit later in this presentation. Second, we will provide more insight into the asset footprint improvement I just mentioned. Third, we will cover ALPEX recent additions to our board of directors. And finally, we will provide more comments on our revised CAPEX guidance for 2023. The first quarter results were characterized by lower demand, mainly in the polyester segment. Although we did experience some signs of recovery as the quarter progressed, the main reasons were still elevated inventories in the value chain. We maintained reduced exports, particularly in polyester due to higher regional prices of key fish stock paraxylene. Macroeconomic environment pressures such as high inflation rates that impacted consumption. Continuous seasonality for PET and relatively weak demand in some industries such as construction affecting EPS business. On polyester, Asian integrated PET reference margins were 2% higher versus the previous quarter, averaging $343 per ton. and with a spread between Chinese and Asian reference margins also increasing to $120 per ton. Meanwhile, polypropylene reference margins declined to an average of 17 cents per pound, 26% lower quarter on quarter, which is in line with Alpec's expectation. The sequential decrease was mainly due to the rising polypropylene supply in the Americas as new capacity has come on stream. EPS reference margins have continued to gradually return to historical levels, averaging 49 cents per pound, a 23% reduction quarter over quarter. Reference ocean freight costs have continued to normalize to historical levels, resulting in a reduction in import parity pricing, which is relevant to our businesses, in particular for polyester and EPS. At this point, Jose Carlos will take over and delve more into the financial results.

Thank you, Jorge, and thank you all for being here with us today. I would like to share with you some of Alpec's main highlights during the first quarter. To begin, overall volume was 1.16 million tons, a reduction of 6% quarter over quarter, primarily as a result of high pet inventory levels in the market, seasonality, and lower exports in the polyester segment. Compatible EBITDA reached $207 million in line with Alpec's expectations for the quarter. However, representing a reduction of 23% quarter over quarter, mainly due to lower demand, the decrease in reference margins in the plastic and chemical segment, and continued normalization of reference ocean freight costs. In the first quarter, Alpec paid a dividend of $159 million, reaching an implicit dividend yield of 5.4% for the year. Total volume was 1.16 million tons for the period, a reduction of 6% quarter on quarter. In the polyester segment, volume was 939,000 tons, 7% lower quarter on quarter. The segment experienced a softness in demand due to high pet inventory levels in the market, particularly at the beginning of the year. During the first quarter, we also experienced reduced exports, driven primarily from the increased cost of paraxylene, Due to prices connection between North America and Asia. In plastics and chemicals, volume was 222,000 tons, 2% higher quarter on quarter and above expectations. Despite the mine softness in some industries and additional polypropylene supply in the Americas. Moving on to raw material price dynamics, the industry experienced a gradual decline in brand crude oil prices to an average of $81 per barrel, 8% lower than in the previous quarter. Accordingly, US reference paraxylene prices decreased by 3%. In the plastic and chemical segment, average reference propylene prices increased to 50 cents per pound, a 56% increase when compared to the previous quarter, primarily due to shortages in PGP supply. Switching over to EBITDA breakdown for the quarter, overall comparable EBITDA for the quarter was $207 million, 23% lower than in the previous quarter. This was mainly due to lower demand, a decrease in plastic and chemical segment reference margins, and continued normalization of reference ocean freight costs. It is important to note that these figures were within our quarterly expectations. Reported EBITDA was $187 million. 1% higher quarter-on-quarter, and this result was primarily incorporates the Cooper River site at one-time shutdown costs. If we take a closer view at results by segment, polyester comparable levidad was $133 million, 12% lower quarter-on-quarter. As commented before, this result reflects an increasing nation integrated polyester reference margins, Softer pet demand due to higher than expected inventory levels and paraxylene prices connection between North America and Asia that continue affecting the import parity pricing and exports. In plastic and chemicals, comparable levity resulted in $77 million, a 36% decrease quarter on quarter. This was mainly due to an increase in supply of polypropylene affecting reference margins and gradual return to historical levels of EPS reference margins due to lower demand within certain industries such as construction. With regards to free cash flow generation, networking capital investment increased by $66 million, primarily due to rising raw material prices in the plastic and chemical sectors. CAPEX totaled $52 million and was mainly allocated for the Corpus Christi Polymers project and to a lesser degree towards the scheduling maintenance. ALPEX distributed a total dividend of $185 million during the first quarter. Of this amount, $159 million was paid to shareholders as approved by the Annual General Shareholder Meeting and the remaining amount to minority shareholders. Free cash flow for the quarter was minus $29 million. Finally, regarding the company's financial position during the first quarter, Alpex net debt increased to $2.1 billion. Last 12 months, reported EBITDA was $1.2 billion, therefore resulting in a leverage ratio of 1.8 times net debt to EBITDA. Thank you, everyone. I will now turn the call back to Jorge.