Marfrig Global Foods SA

Welcome to Q1 results of Marfregi. This has been recorded and is made available in both languages. Click on the interpretation button and choose English. Mute original audio if you so wish. The following executives are attending the meeting today. Mr. Marcos Molina, founder and chairman. Mr. Tim Klein, CEO, North America. Mr. Rui Mendoza, CEO, South America. Mr. Tang David, CFO, VP and IR. Mr. Jonas Jose Ignacio Scorseria, Corporate Financial Director. Paulo Pianis, Sustainability Director. And finally, investors, relations director, Mr. Eduardo Puzziello. All participants will be in a listen-only mode. We will then have a Q&A session. Further instructions will be given then. Before proceeding, we would like to state that Any statements made during this earnings call are related to business perspectives of Marfrig Global Foods projections, operation, and financial targets that constitute beliefs and assumptions on the part of the company, as well as information currently available to Marfrig Global Foods SA. future considerations are no performance guarantees because they involve risks, uncertainties, and assumptions because they refer to future events and therefore depend on circumstances that may or may not occur. Analysts should understand that market conditions, economic conditions, may impact Marfrig's results and will make them different than those projections. Mr. Eduardo Poziello, you have the floor. Thank you for attending Mark Frigg's earnings call. Before starting, I would like to emphasize that starting this quarter, We are showing consolidated Marfrig results considering North America, BRF, and South America segments only with the managerial results of continued operations. This change aims to demonstrate Marfrig's operations with its new business model in South America. Moving on to the key operational highlights of this Q1. Let me start with consolidated net revenue, 30.4 billion reals. That is 3.8% above the net revenue year on year. Regarding revenue diversification by geography, North America accounted for 46% of consolidated revenue in this quarter. South America, considering only the managerial result of continued operations, accounted for 10%. And BRF's results accounted for 44%. Regarding revenues by operation, our continued operations in South America had net revenue of 3 billion reals, and the adjusted EBITDA margin was 9.6%. BRF's net revenue was 13.3 billion rials and the adjusted EBITDA margin was 15.9%. Finally, North America operation presented in the quarter net revenue of $2.8 billion and an adjusted EBITDA margin of 2.1%. The consolidated adjusted EBITDA was 2.6 billion rials 94.8% above the EBITDA of Q1 of 2023. As a consequence, the consolidated adjusted EBITDA reached 8.7%, 407 BIPs above the margin year on year. When we analyzed the adjusted EBITDA by the consolidated quarter by geography, North America accounted for 10% of the total. South America also contributed with 10%. BRF's EBITDA accounted for 80% of the total. Moving on to the key financial highlights, I would like to highlight that operational cash flow was positive at 1.5 billion reals and net income in Q1 2024 was 62.6 million reals a reversal from the loss of over 600 million reals year on year the dollar continues to be the main currency representing 73 percent of the consolidated revenue in q124 Regarding Marfrig's leverage, we have been in the process of deleveraging over the past few quarters. By the end of the first quarter of this year, our consolidated leverage was 3.4 times net debt to adjusted EBITDA for the last 12 months, compared to 3.71 times at the end of Q4 of last year. Moving on to sustainability, I would like to remind you that MyFrig has recently anticipated its target of full traceability of its direct and indirect suppliers to 2025. And finally, in March 24, Marfrig rectified its control in BRF by electing its full slate for a new two-year term. I'll now hand over to Tim Klein, North America's CEO. Tim.

Thank you, Eduardo. Let's begin on slide 4, where I will talk about the first quarter of 2024. Starting on the left, sales volume was 2.4% higher than last year. It is important to highlight that the first quarter of 2024 included 13 weeks of activity, while the first quarter of 2023 included 12 weeks. Net revenue was 9.6% higher than the same period of last year. coming in at $2.8 billion. On the chart to the right, adjusted EBITDA was $58 million, down 42.6% compared to the first quarter of last year. Please move now to slide five, where I will talk about U.S. market data. USDA reported Kansas live cattle prices averaged $180.12 per hundredweight, up 12% versus last year. The USDA comprehensive cutout averaged 297.69, up 7%, while the drop credit declined 12.7% to an average of $11.70 per hundredweight. The cutout ratio dropped to 1.66 versus 1.74 last year. The retail beef demand index was 5% higher than last year and versus the prior quarter. As we look forward to the rest of 2024, lower fed cattle supplies will result in reduced capacity utilization across the industry. We do expect continued strong beef demand will result in some margin improvement as we move into the barbecue season. Now I'll pass to Rui.

Thank you, Tim.