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Alpek Sab De Cv Ord
4/22/2026
Welcome to ALPEC's first quarter 2026 earnings webcast. I am Barbara Amaya, IRO, and I am pleased to be here with Jorge Young, our CEO, Jose Carlos Pons, our CFO, and Rodrigo Prieto, our incoming CFO, who will be joining us for the first time. Today's presentation will cover the following topics. Jorge will begin with an overview of the quarter. Next, Jose Carlos will review the company's financial performance, followed by an update of our outlook from Jorge. Then, Rodrigo will share brief remarks as he transitions into the CFO role. And finally, we will conclude with the Q&A session. 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, we express our financial results in US dollars unless otherwise specified. For your convenience, this webcast is being recorded and will be available on our website. Jorge, I'll turn the call over to you.
Good morning, everyone. Thank you for joining us. Over the last three years, we have executed key actions set on enhancing AlPEC's global competitiveness, aligned to its strategic pillars, including cost reduction through global footprint optimization, reinforcing financial flexibility by prioritizing cash flow generation, and expanding our product portfolio through growth initiatives. These actions have positioned the company to respond effectively amid the ongoing volatility in the industry, allowing us to convert operational readiness into solid results. This was evidenced by our first quarter performance. Market dynamics were positively influenced in March due to geopolitical tension in the Middle East, supporting higher margins. Importantly, during the quarter, our sites in the region did not experience material disruptions as we quickly adapted our operational strategies. We continue to actively manage risk and closely monitor the situation to ensure the safety of our employees, operations, and supply chains. I would like to take this moment to recognize our teams everywhere in ALPEC, but especially in Oman, Dubai, and Saudi Arabia for their commitment during this challenging environment. Regarding our global operations, ALPEC had very solid performance in its core segments as most facilities ran steadily, with the only exception being one of our PTA sites in Mexico, which experienced temporary production losses Due to steam supply disruptions from a third party provider. Additionally, in our emerging business segments, natural gas contributed with incremental profitability following the severe winter storm in the Gulf Coast region in January. As a result, comparable EBITDA reached $150 million, exceeding our initial expectations and honorable 50% improvement over the previous quarter. Turning to key developments, we continue advancing our strategic priorities across our key pillars. We strengthen our core business by further optimizing our footprint through the shutdown of recycling sites in Redding, Pennsylvania and Pacheco, Argentina. These actions align our asset base with current market conditions, including increased demand for virgin PETs while relocating ARPED production to our other more competitive sites. We reinforced our financial flexibility through the completion of the sale of the Beaver Valley site in Pennsylvania, marking progress on phase one of our non-strategic asset monetization plan. This will result in an increase of 10 million in free cash flow in the second quarter. In parallel, we're advancing actions across our broader portfolio to monetize additional non-strategic assets in the US and Mexico. Regarding our monetary sites, land development and regulatory processes are ongoing. And as such, project monetization is not expected earlier than 24 months. We also advanced two selected growth initiatives. First, the completion of an EPS extrusion project in the United States that will enable us to produce different grades, including grade EPS and product with recycled content. And second, the initiation of a $70 million investment over the next three years in our polypropylene plant That is focused on expanding our portfolio of differentiated products. Finally, we continue to make progress in energy commercialization, supporting diversification while creating additional values, additional avenues for long term value creation. All these actions remain fully aligned with our strategy and our focus on discipline execution. With that, I will turn the call over to Jose Carlos.
Good morning, everyone. Let's delve deeper into financial performance. The first quarter reflected both strong execution across the organization and a more supportive market backdrop towards the end of the period. I'll start with the results for the polyester segment. Compatible EBITDA reached 76 million, driven by a stronger operational execution, improved volume levels and higher margins, particularly towards the end of the quarter. Additionally, Chinese reference margins, notably last month, averaged $246 per ton. Moving to the plastics and chemical segment, comparable EBITDA increased to 60 million, driven by higher volumes and stronger performance, partially offset by lower reference margins. In terms of our consolidated results, volume reached 1.1 million tons, an improvement of 9% on a quarter-on-quarter basis. Reporte de EBITDA total $162 million, benefiting from favorable inventory adjustment from high raw materials prices, offsetting restructuring costs. Comparable EBITDA reached $150 million, representing a substantial 50% sequential improvement and an 18% increase year over year. And as Jorge mentioned, ahead of our expectations. Overall, the quarter reflects our company's solid execution amidst favorable industry conditions. Turning to cash flow and capital allocation, during the quarter, Alpec generated operating free cash flow of $90 million, driven by higher EBITDA and a marginal net working capital investment. CapEx total $38 million, primarily related to maintenance and the key initiatives within our plastic and chemical sector, aligned with our long-term strategy to increase our portfolio share of higher value solutions. Moving to our balance sheet and financial position, net debt was $1.77 billion. This included a significant $72 million reduction. As a result, combined with a stronger last 12 months EBITDA, leverage improved to 3.9 times compared to 4.4 times at the end of the last year. These results represent a meaningful step forward in strengthening our balance sheet and highlight our commitment to the leveraging strategy. Based on current performance levels, we believe we are well positioned to continue accelerating our path toward our target of 2.5 times. With that, I'll turn the call back to Jorge to discuss our outlook for the year.
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