Grupo Herdez, S.A.B. de C.V.

Good morning, everyone, and welcome to Grupo Heredia's first quarter 2021 results conference call. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. At this time, I would like to turn it over to Mr. Gerardo Canavati, Chief Financial Officer. Please go ahead, sir.

Thank you, Shannon. Thank you. Good morning, everyone. Thank you for joining us on today's call. I hope you and your families are doing well. We kicked off 2021 on a positive note. Although it seems it would be difficult to surpass the first quarter of 2020 due to a high comparable base, we achieved top line growth against last year considering the businesses withdrawn in 2020. Results in the preserve segment showed the resilience and strength of our portfolio. and we are optimistic about the household penetration of our products after a year of the stay-at-home restrictions. Meanwhile, results in the frozen segment continue to face challenging conditions due to the mobility restrictions at the beginning of 2021, which are starting to subside. As usual, Andrea will walk you through the results for the quarter, and we will take your questions at the end. Andrea?

Thank you, Gerardo. Good morning, everyone. As mentioned in the press release, this quarter is not comparable versus 2020 for several reasons. First, we don't have the sales of naive and fresh tuna. As well, we ended the distribution agreement with Ocean Spray effective 2021. And finally, EBITDA and EBITDA comparisons will be affected by the extraordinary income registered last year as a result of the divestiture of the tuna business. Having said that, on a comparable basis, net consolidated sales increased 7.7%, while preserves grew 10.4% in the quarter. Growth was mainly driven by price increases implemented in the last 12 months, but also by double-digit growth in categories that have experienced significant penetration as a result of the cook-at-home phenomenon. On the other hand, our frozen business continued to be affected by the mobility restrictions through January and February of this year, which resulted in limited-hour operations. At the Laos Nestlé, modern trade continued to drive sublime performance while the traditional channels lacked. Consolidated gross margin in the quarter was 37.5 percent, 30 basis points lower than last year. In the preserve segment, however, gross margin expanded 190 basis points to 37.4% as a result of higher prices and a favorable sales mix. Gross margin at frozen decreased almost 600 basis points as a result of sales channel mix in the level of the split and lower operating leverage. In exports, gross margin decreased by a stronger U.S. dollar. Consolidated SDMA in the quarter was 26.6% of net sales, 40 basis points higher compared to the same period in 2020 due to expenses related with the digital transformations announced in February. Consolidated EBIT before other income decreased 4.2%. In preserves, EBIT before other income increased 16.2% with a margin expansion of 200 basis points. Frozen, registered an operating loss of $195 million, which compares in favor of you versus last year. During the quarter, we registered other income of $8 million compared to the extraordinary $194 million recorded in the previous year, coming from the divestiture of 50% of the tuna fleet. Consolidated EBIT decreased 24.8%, but on a comparable basis, it would have decreased only 6.5%, representing a margin of 11. During the quarter, equity investment in associated companies was 243 million pesos, 78% higher than in 2020 as a result of sequential improvements in Megamex related to lower avocado prices, as well as the recovery of the food away from home channel. Consolidated net income in the quarter was $542 million, which was 18.7% lower than in the previous year, but excluding one of, it would have been flat. Pre-cash flow in the quarter was $535 million. We bought back 3.1 million shares, and CAPEX amounted to $129 million. As you may be aware, yesterday's annual shareholders meeting approved a share buyback program of 1.5 billion, and canceled 26 million shares held in treasury. It also declared a dividend of 1.2 per share paid into exhibition. With that, I will now turn the call over to Gerardo.