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

Good morning everyone and welcome to Grupo ERDE's third 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 the call over to Mr. Edardo Canavati, Chief Financial and Information Officer. Please go ahead, sir.

Thank you, Ariel. Good morning, everyone. Thank you for joining us on today's call. I hope you and your families are doing well. These quarter results were full of contracts between top and bottom line. Conserved volume performance was solid. Impulse sequential recovery was on track, and as anticipated, a significant gross margin erosion was experienced. All this is in a most challenging environment with new regulations in place and unprecedented supply chain constraints. Having said that, 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. Just as a reminder, 2021 numbers are not fully comparable for several reasons, such as the divestment of the tuna business, the incorporation of the distribution of General Mills portfolio since April of this year, and the end of the distribution agreement with Ocean Spray at the end of 2020. Having said that, Organic net sales increased 15.1% in the quarter and 8.1% over the first nine months of the year. During the quarter, one-third of the growth is attributable to volume increases, while the rest is explained by pricing. Continuing last quarter's trend, impulse remains tracking upward as food traffic to stores recovers. Additionally, a lot of Nestlé sales experienced a strong performance throughout all channels, including the traditional one. In exports, net sales remained practically flat in the quarter and 9.3% lower on a cumulative basis. These results are mainly explained by a weaker U.S. dollar. Consolidated growth margin in the quarter was 35.2%, 230 basis points below the third quarter of 2020. This was mainly as a result of the 310 basis point impact on preserves, mainly due to higher costs for soybean oil, among others, as well as a decrease of 850 basis points in the export segment as a result of the exchange rate, too. Consolidated SG&A in the quarter was 24.7% of net sales, 140 basis points lower than in the same period of last year. SG&A as a percentage of net sales in the preserve segment decreased 20 basis points and 20.1 percentage points in impulse as a result of expense absorption due to the recovery at the top line. Consolidated EBIT before other income increased 7.6% in the quarter as a result of a 128 million recovery in the operating loss that the impulse segment recorded last year, which more than offset a 3.7% decrease in preserves. In the quarter, we registered other expenses of 60 million mainly due to the VAT dispute and COVID related. Consolidated EBIT and EBITDA remained almost flat compared to last year at 655 and 886 million respectively, while the margins declined 150 and 190 basis points mainly due to gross margin pressure. In the quarter, Income from unconsolidated companies was $162 million, 12.1% higher than in 2020 due to several factors. One, Megamex recovery in the institutional channel, and second, better performance of Don Miguel. Consolidated net income for the quarter was $455 million, 18.8% higher than in the previous year because of the results in the impulse segment. Majority net income increased 143.5% during the quarter due to the results of impulse. Consolidated cash at the end of the quarter stood at 3 billion pesos, up 300 million from the second quarter after buying back 2 million shares and net capex of 135 million. Interest-bearing liabilities remained at 9.5 billion pesos with an average life of 5.4 years and an average cost of 7.5%. Leverage ratios remained stable and net debt consolidated EBITDA was 1.9 times. With that, I will now turn the call over to Gerardo.