Grupo Traxión, S.A.B. de C.V.

Greetings. Welcome to the Traxion 3Q23 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Abby LeChain, Executive President at Traxion. You may begin.

Good morning, everyone. Welcome again. I'm very pleased to share with you the outcome of an all-successful quarter full of good news and positive results. There are many things to discuss in the financial, operating, and ESG fronts that will be explained in more detail by Rodolfo, Wolf, Antonio. But as usual, I want to take advantage to point out some relevant matters. We observe that demand was significantly higher than our estimates. That's why we decided to move forward with an equity follow-on on August 10th, which is another very relevant milestone in the company's equity story. We raised 2.7 billion pesos that we plan to deploy mainly to finance the organic growth for our people mobility segment. which continue to present us with profitable expansion opportunities because of the nearshoring. We also plan to use a portion of the proceeds to fund further M&A activity, mainly in the logistics and technology division, to boost our exposure to nearshoring, as we believe that we are the leading facilitator in Mexico for such trend. is one of the very few Mexican companies that has stopped the equity markets in the past few years, which translates into a strong vote of confidence from our investors. We believe that our business model is strong and our growth prospects are compelling. This financial strength is one of our most significant competitive advantage and is among the highest barriers of entry in the sector together with our modern technology and extensive operating infrastructure, especially in the most desirable location for nearshoring. In terms of PNL, Tracción posted record high figures. Revenue grew 18.9%, almost reaching 6.4 billion pesos, while EBITDA increased 25.7% and passed again the one billion mark. Moreover, net income grew more than 60%. Moving on to the operating side of the business, all our key metrics show healthy improvements. We continue to become more efficient in cargo, maintaining the revenue level with less trucks, focusing on cross border and specialized services. One interesting fact is that our fleet has not grown significantly since 2019, but over the last three years, we have added increased cargo capacity with Traxporta. We now operate more than 3,200 third-party trucks through this app. With that, we have more than doubled the cargo capacity of Traxion without incurring an expansion capex of the fleet. Thanks for your attention. With this, I end my remarks, and I will hand over to Rodolfo Wolf Antonio for a deeper dive into the figures. Please, Rodolfo.

Thank you, Avi. Hello, everyone. Thanks for your attention. There are several operating matters to discuss today. First, in the mobility of people segment, our fleet keeps growing, together with our revenues per kilometer, as we become more efficient in terms of costs. Demand level keeps coming in strong. mainly driven by new clients starting operation and current clients spending their existing ones. All of that is being driven by nearshoring. Both operating profit and EBITDA came in higher than the revenue of the segment, which is indeed very good news. EBITDA margin posted a healthy 25.7% in line with our expectations and with the level of growth of the division. which includes pre-operating costs and expenses to properly start new operations. We continue to leverage through our commercial muscle, operating capabilities, and IT platform to grow on the most profitable opportunities in this market. We continue expanding organically in this segment with great momentum, a strong balance sheet, and very favorable levels of demand. The sheer size of our infrastructure together with our high-quality service, are attributes that place Tracción in a very special niche, where the company is able to serve large clients with extensive complex mobility needs. Moving on, in the logistic and technology segment, we have exceeded 800,000 square meters of 3PL warehousing space under management, which represents a 33.7% growth compared to the same period of last year. This was mainly driven by organic growth of our regular business, together with strong expansions of the pharma division. We plan to continue growth this line by enhancing our commercial position as these services carry on penetrating in Mexico. Finally, in terms of mobility of cargo, we advance with a renovation and fleet management program. Additional to that, the average fleet decreased more than 140 units this quarter. Kilometer volume decreased 10.5% as well. However, revenues show a marginal increase. Despite of that, and in line with the reorganization strategy, both operating income and EBITDA came in 99.3 and 28.7%, respectively higher in the second quarter of last year. mainly driven by a growth of 12.5% in revenue per kilometer. This was achieved by expanded activity in specialized cargo operations, which typically carry better economics with reduced distances, which basically means that we are becoming progressively more efficient on a per-unit basis. All of that resulted in an EBITDA margin of 21.9%, well within our long-time targets. We expected to keep operating this segment with such efficiency. Indeed, this was another busy quarter. We are excited about prospects for the next year. Thank you for your attention. With this, I end my remarks. Please, Wolf, go ahead.