Grupo Traxión, S.A.B. de C.V.

Greetings, welcome to the Traxion 4Q23 and 2023 earnings call. At this time, all participants are in a listen-only mode and the floor will be open for questions following the 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 Avi Lichain, Executive President of Traxion. You may begin.

Thank you. Good morning. Welcome again. I'm very pleased to share another quarter of extraordinary outcome, both financial and operational. The company has posted record high figures consistently, and this quarter was not an exception. As usual, I want to share with you some very significant milestones. First, Fracciona exceeded again its growth expectations. Consolidated revenue was 22% higher than last year, which is more than 38% above what we got in the market exactly one year ago. One of the main reasons for such expansion was the logistics and technology division, our asset light arm, which posted a growth of almost 42% in 2023. and contributed with a third of total revenues in line with our plans. We have always said that this is the highest growth segment within the company, and we expect this division to be more significant portion of our business over time. Moving on, we continue to see strong demand for the people mobility segment. As we say through the year, Tracción ended 2023 with 8,000 buses in operation within such division. We expect the new short-term trend to continue presenting us with very attractive road opportunities, especially in the northern regions and the Bajio. Logistics and mobility services have been boosted, and our goal is to capitalize on those opportunities profitably. In that line, Traction is well prepared to face such expansion. We have a very strong balance, a great commercial Moscow, the most advanced IT platforms, and an extensive operational infrastructure. All of that will enable Traction to continue to be the leading player in our industry. Moving on, please be aware of our guidance for the year. Management expect to grow top line at around 19% while maintaining the same margin levels as in 2023 and to deploy approximately 4.2 billion pesos in capex. mainly to fund organic growth of the people, mobility fleet, and the renovation program of the cargo division. With all of that, and considering the M&A activities, we expect to remain below 2.5 times net debt to EBITDA. Finally, we have been one of the very few Mexican companies to tap the equity markets in recent years. In that line, Traction already deployed 50% of the proceeds of its recent follow-on. and has already signed contracts to deploy the rest within the first half of this year. These are very good news, as we are disposing such resources in half the time we originally planned. Thanks for your attention. I will now hand over to Rodolfo for a deeper dive into operational details. Please, Rodolfo.

Thank you, Avi, and thanks everyone for your attention today. As Avi said, At the end of 2023, Traction was now operating more than 8,000 buses in mobility of people, which is slightly different than the reported figure. Please remember that we report average units, not total. These represent a growth of more than 1,300 buses in the year. Again, in absolute terms, not average. Having clarified that, let's move on with more details. Demand level keeps coming strong, mainly driven by new clients starting operations and current clients expanding their existing ones. All of that being driven by new shoring. Tracción carries on expanding organically in this segment with great momentum. The sheer size of our infrastructure together with our high quality services are attributes that place Tracción in a very special niche. where the company is one of the very few players able to serve large clients with extensive and complex mobility needs. We help our clients to design and plan well in advance their needs for mobility, which grows more complex as the nearshoring continues to penetrate and industrial parks are developed farther away from urban areas. On the other hand, our fleet reconfiguration program is right on track. We have been shifting our fleet to operate more cross-border circuits and other specialized cargo formats that typically bear higher economics. As a result, revenue per kilometer grew 19.8%, which indeed is a very remarkable figure. In this division, if you move down the bottom line, you will see some interesting details. First, operating income grew more than 124% in the quarter and 85% in the year. And second, EBITDA expanded more than 36% in the quarter, posting a very healthy 22.9% of margin. But most relevant is the spread between revenues and cost per kilometer, which is higher than in the past periods. And it's further proof of becoming more efficient on a per unit basis. Shifting gears, In the contract logistic division, our 3PL warehouse expanded more than 155,000 square meters in this quarter, which represents a 22.8% growth in light with our plans, and mainly driven by the operation of the pharma division, which, by the way, posted a healthy revenue growth in the year. Traxporta continues growing as per our plans, reaching the $100 million revenue mark. a very significant milestone indeed, and the future expectations look equally positive. As you can see, it was a very busy year with many challenges, but with strong growth and a compelling story. Thank you for your attention. With this, I end my remarks. Please, Wolf, go ahead.