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

Good morning, everyone, and welcome to Grupo Herdez's first quarter 2023 earnings 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. Guillermo Perez, Investor Relations Manager. Mr. Perez, please go ahead.

Thank you, Gary. Good morning, everyone. Thank you for joining us on today's call. We appreciate your interest in Grupo Herdes. We started the year with great momentum, posting strong results. Despite persistent inflationary pressures and constant setbacks around the globe, we do think inflation has peaked and consumption, although soft, should remain stable. Net sales rose 21.4% in the quarter, while price increases were still the main driver for the quarter. Total volume remained flattish. Net sales in preserves grew 23.6%. By category, tuna, mayo, pasta, and tomato puree increased more than the average. while food service and price cloud channels also outperformed. The addition of Mediterranean acquisition in the fourth quarter of 2022 contributed with 2.2 percentage points to the growth of this segment. Impulse was also an outlier, with sales growing 22.6% in the quarter. Recovery of food traffic in stores was a main driver for higher average tickets. Similarly, the performance of the traditional channel at the Loudness Lake continued, with a good trend. In exports, net sales increased 2.4% in the quarter, mainly driven by a stronger Mexican peso, while on a dollar basis, sales increased 7.3%, despite softer volume than expected. Consolidated gross margin in the quarter was 36.4%, 20 basis points higher than in the first quarter of 2022, as a result of the pricing catch-up versus high input prices. Consolidated SG&A was 24.2% of net sales in the quarter, which was 60 basis points lower versus the first quarter of 2022 due to expense absorption resulting from top line growth. Thank you for your attention. Let me now turn the call over to Andrea.

Thank you, Guillermo. Consolidated EBIT and EBITDA increased 25.2% and 22.3%, while margins expanded 40 and 10 basis points respectively. This is the result of the expansion in preserves and the recovery of the impulse segment. In the quarter, income from unconsolidated companies was 295 million pesos, 185% higher than in 2022 due to a threefold recovery at Megamex, as was expected, mainly driven by price increases and lower avocado. Consolidated net income for the quarter was 797 million pesos, 72% higher than last year, with a margin expansion of almost 300 basis points to 9.2%. Consolidated net income benefited from the recovery of Megamex, as well as a stabilized income tax rate. Our financial position remained strong. Cash in hand stood at 3 billion pesos, which is 27% higher than at the year end of last year. Interest-bearing liabilities were $10.5 billion flat against December. Free cash flow for the quarter was $950 million, or 11% of sales, which is a record, driven by a strong net income as well as working capital improvements across all components. For the second year in a row, Grupo ERDES received the distinction of being ranked in the top 10 of MERCOS 100 companies with the most ESG responsibility. This year, Grupo ERDES placed eighth overall and third among food companies. With that, I will now turn the call over to Gerardo for our final prepared remarks.