Grupo Traxión, S.A.B. de C.V.

Greetings and welcome to the Traction's first quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Abby Lichtenstein, Chief Executive Officer. Thank you. You may begin.

Thank you. Welcome, everyone, and many thanks for joining us today. I hope you and your families are well and healthy. I am very sorry about what is happening in the world. I really hope that this situation normalizes quickly. In spite of this sad situation, Traction delivers solid and positive quarterly results. It is important to highlight that our revenues show a healthy growth of 12%. while keeping a strict control in cost and expenses. Moreover, the company continues to be more efficient in asset utilization and operations. It was in there a very favorable period. Rodolfo Wolf Antonio will discuss those metrics in a moment. We face the COVID-19 contingency with a solid financial position, a strong balance sheet, and a cash on hand. Our business is essential to the economy. and we plan to continue operating. 100% of our debt is in pesos, and currently below two times net debt to EBITDA. On the other hand, approximately 10% of our revenues are denominated in dollars, and all our costs and expenses are in pesos. We have been rearranging our revenue base in our two business lines. In the passenger segment, schools shut down, and many corporate supported home office. Nonetheless, the structure of contract in this business contribute to minimize the impact of the situation because they consider a fixed revenue base. Under such circumstances, these clients know that they have full availability and the service secure when they decide to resume activities. Moreover, there are other corporate and industrial clients that have not stopped and ask us to increase the fleet capacity because they need their employees to continue commuting while keeping social distance during the ride. Now, in the cargo and logistics segment, we started seeing a decline in the auto industry and in the export circuits. However, our diversity and flexibility enabled us to quickly move into other sectors, such as retail and basic consumer goods, and allow us to shift our fleet capacity toward other regions. With these actions, we regain a good portion of our kilometer volume. In the logistics front, we continue ahead with our plans to develop an asset-light business, and we have made significant progress. We expect to have more details for you shortly. All of that was possible thanks to a unique operating platform. Traction has a diverse client base, a flexible fleet, broad geographic footprint, prominent brands, modern systems, a tremendous commercial muscle, and a seasoned management team. This is our most important competitive advantage. This is what enabled us to build a solid and resilient business. In financial terms, we decided to grow all the available credit facilities to reinforce our cash position. We'll give you more details in a moment. Finally, we have worked very hard to deliver these positive quarterly results. We speak to our clients every other day in order to know about their needs. We are in close contact with our suppliers and we are conducting great efforts to manage the operational shift in an efficient way. We are keeping our people safe and healthy. We operate on strict sanitary measures. and our personnel has received constant training and information about all relevant matters of the contingency. I am convinced that Tracción will end up in a better position than competitors when the cycle normalizes. With this, I conclude my remarks and I hand over the call to Rodolfo. Please.

Thank you, Avi. Hello, everyone. I hope you are well. Setting aside the effects of COVID-19 pandemic and Mexico economic situation, Fraccion delivers impressive figures once again. And there are very important milestones worth mentioning during this first quarter. I will focus my comments on these achievements. Our fleet grew 2.9% with a kilometer volume increase of 4.6%, which is proof that the company continues running with a strong operating leverage. In the cargo segment, We boosted our specialized services. Refrigerated freight grew more than 65%, while the auto-loading tank service increased more than 85% compared to the first quarter of 2019. Within this business line, we now added tanker trailers to start the fuel transportation service, which we expect it to be a great opportunity in the near future. As Abby mentioned, we increased our asset utilization by 2.9%. We have continued growing our kilometer volume while reducing our fleet compared to the same period of last year by being more efficient on its allocation. Moreover, in terms of productivity, we reduce our driver turnover almost 20%, which is meaningful given to the high ratios of the industry. We achieve this by encouraging a deeper sense of belonging among our staff through our initiatives developed by our own human capital department. This represents a major milestone for our company, and it's a trade we are excited to promote. In terms of logistics, there are many elements to discuss this quarter, but what is probably the most relevant is that we converted more than 40,000 square meters of warehouse we had with temporary clients to permanent contracts with three-year continues. Furthermore, we received the awards of Mars and Kellogg as the best supplier and supplier with perfect deliveries. Traction increased its profit in logistics by more than 38% this quarter on a per square meter basis by achieving efficiencies in both pre-operating and ongoing cost. Moreover, throughout a last mile platform, Traction multiplied four times its e-commerce volume compared to the first quarter of 2019. Shifting to the personnel and student transportation segment, there are several financial and operating highlights to discuss. First, revenues increased by 16.3% in the first quarter, and it's important to highlight that this was mainly driven by fleet optimizations, since our fleet only grew 4.1% in the same period. EBITDA grew 17.1%, with a margin of 23%. Second, in the operating side, Revenues per kilometer grew 10.9%, while the cost per kilometer increased by only 7.6%, mainly due to a cost optimization program implemented by management in the last month of 2019 that has delivered really good results. As you can see, it was a very interesting quarter full of great news. And even though the recent contingency is causing global economic and social stress We have a great management team, and we are focusing on seeking all the opportunities in our industry. Having said this, I will hand it over to Wolf. Thank you.