Marfrig Global Foods SA

Good afternoon and thank you for standing by. Referring to the fourth quarter results for 2024, this presentation is also being recorded and being simultaneously translated for both languages. For those listening to the conference in Portuguese, please click on the interpretation button globe and select Portuguese for a better experience. Click on mute original audio. Here with us today, we have Mr. Marcos Molina, Chairman of the Board, Mr. Tim Klein, CEO of National Beef, Mr. Rui Mendoza, CEO for South America, and Mr. Tank David, CFO and IRO, José Inácio Scoceria, Corporate Finance Director, and also IR Officer, Mrs. Stefan Zolinowski. participants will be connected in listen-only mode during the company's remarks. After that, we'll start a Q&A session. When further instructions will be provided. Before moving on, I'd like to make clear that forward-looking statements made during the conference refer to the company's business outlook. Also refer to operating and financial targets, which are based on beliefs and assumptions on the part of the company's management, as well as on Information currently available for Marfree Global Foods SA. Forward-looking statements are no guarantee of performance, saying above risks, uncertainties, and assumptions, as they refer to future events and therefore depend on circumstances that may or may not materialize. Investors and analysts should have in mind that general conditions, economic conditions, and industry conditions might affect forward-looking statements and does lead to results that will differ substantially from those expressed in these forward statements. I'd like to turn the conference over now to Mr. Tank David, who'll start. Please, Mr. David, you may carry on. Good afternoon, everyone, and thank you for joining us today for yet another video conference for Marfreak Global Foods. We comment on the results in a consolidated basis for Q4 2024. Consolidated numbers include the business segments BEEF North America, BEEF South America and continued operations and BRF as per CPC and IFRS standards. Starting on slide number two then, with the main highlights for Q4 2024 and also for the whole year 2024. In Q4 2024, we generated 41.3 billion reais in terms of consolidated net revenue, 22% from Q4 2023. That number totaled for the year 2024, a consolidated net revenue of 144.1 billion BRLs, up 14% from the revenues for 2023. The consolidated adjusted EBITDA for the Q4 reached 3.7 billion reais, with a consolidated margin of 9.1%. For year-to-date, 2024, adjusted EBITDA in consolidated numbers reached 13.6 billion, or 59% above that filed for 2023, a margin of 9.5%. The growths in EBITDA and revenue reflect our strategy in terms of investing in a business model which is diversified, both in protein and also geographically speaking, and a focus on a portfolio of higher added value. We also delivered higher free cash flow and net profit. and have reduced leverage to 2.4 times in U.S. dollars and 2.8 times in reais. And I'll comment on those numbers in the last slides further on. I turn now the floor over to Tim Klein, who will be talking about the numbers for North America.

Thank you, Tane. Let's begin on slide four, where I will comment on the results for the fourth quarter. Starting on the first chart on the left, total sales volume varied by 0.8%. remaining mostly in line with the same period of the previous year. Although we processed fewer head, overall volume was higher due to heavier carcass weights. Net sales came in at $3.2 billion, an increase of 4.8% versus last year. EBITDA for the quarter was $62 million, which was 22.2% lower than last year, with an EBITDA margin of 1.9%. Beef demand in the quarter was good, both at retail and food service. However, it was not enough to fully offset escalating cattle prices and lower values for drop credit items, resulting in a decrease in margins compared to Q4 of 2023. Now move to slide five, where I will talk about U.S. market data. Starting on the left, USDA reported Kansas live cattle prices averaged $188.80 per hundredweight, up 6.2%. The USDA comprehensive cutout averaged $308.80 per hundredweight, up 5.7%, while drop credit values declined 10.1% to an average of $11.26 per hundredweight, driven mainly by lower prices for hides and tallow. The cutout ratio was 1.64 for the quarter. Looking forward to 2025, fed cattle supplies will continue to decline cyclically, resulting in lower capacity utilization across the industry. Beef demand is expected to remain strong despite higher beef prices. Strong demand and reduced cattle supplies should push cutout values higher, allowing the industry to achieve margin levels stronger than they were during this segment of the previous cattle cycle. Now I'll pass to Rui.

Thank you, Tim. Let's now move on to slide number seven, if you will, where I'll be talking about the performance in Q4 for continued operations in South America. Let's start on the chart on the left. Total volume of sales. We have reached 241,000 tons in the quarter, 25% above what we had in the same quarter of 2023. The strong growth is driven by investments in an increase in capacity executed by the company throughout the past years, and also because of a higher level of occupancy ensured by the supply for feedlots. Moving to the central chart for net revenue, we have reached 5.1 billion BRLs in the quarter, 19% above that filed in the same period of last year. On the right-hand side, for just the EBITDA, we have reached the amount of R$660 million, up 25% over the EBITDA levels for Q4 2023. Strong performance can be explained mainly by a combination of an increase in capacity, more efficiency in our plants with higher scale having achieved, and a larger share of added value products. With that, we have reached an EBITDA margin of 12.8%. an increase of 60 basis points, even when compared to the great results we saw in 2023. Strong results that we reached during the quarters and the year-to-date numbers come to confirm the efficiency of our business model, which is much more resilient vis-a-vis cycle oscillations and also price moves. Moving to the next slide, I'll be talking about the exports dynamics for the continued operations. In Q4 2024, sales for the external market accounted for 51% of the total revenue for the operation as a whole. Sales for China had a lighter weight when compared to the share in the same period in 2023. And they now represent 52% of all exports for the continued operation coming out of South America. The year-to-date numbers, as you can see in the last chart on the right, exports to China also saw a drop, moving from 60% to a level 14 points lower, to the tune of 46%. worked hard to increase our alternatives in terms of sales channels across all units to reach other markets. The idea, the intention is to capture always the best commercial opportunities. With this objective in mind, we have seen excellent opportunities across different markets. A special highlight going to North America, which in 2024 grew four percentage points, reaching a level of 14% of the total exports for the operation. I now turn the floor over back to Tang, who will continue on the consolidated numbers for March 3. On slide 13, revenue and adjusted EBITDA in Q4. Out of the total revenue created in Q4, 41.3 billion, the segment North America contributed with 45%, BRF with 42%, and South America with 13%. In terms of the beta generation adjusted terms, 3.7 billion, BRF accounts for 74%, South America 17%, and North America 9%. In terms of currency, 72% of our consolidated revenue is generated in U.S. dollars and 26% in Brazilian reais. Now moving on to slide number 15. We see the free cash generation. In Q4, the consolidated operational cash flow was positive by 4.4 billion BRLs. Investments in CapEx and the amount under financial expenses reached 1.4 billion under each entry. As a result, free cash flow for the quarter came out positive at 1.6 billion. For year-to-date 2024, Mark Free created 12.2 billion reais in terms of operating cash flow, resulting in a free cash flow of 2.9 billion, as can be seen on slide number 16. Moving to slide 17, net debt and managerial leverage The consolidated net level totaled 6.3 billion U.S. dollars at the end of Q4, 2024, a drop of 12% vis-a-vis the previous quarter. The leverage ratio as measured by the relation between net debt and adjusted EBITDA year-to-date basis dropped from 2.86 times to 2.47 times as measured in U.S. dollars. When measured in BRLs, the ratio dropped from three times to 2.82 times, making it clear the strong operating results and subsequent strong generation of free cash flow. On slide 18, we have reduced the consolidated leverage for the seventh consecutive quarter, and we closed 2024 at a level of 2.47 times as measured in US dollars, or 1.4 times as measured, or lower than the final number for 2023, rather. the strong operating performance in Q4, combined with the receivable of partial resources from the sales of assets in South America, we have been able to execute several actions to reduce that, reduce financial expenses, and also to reduce leverage levels. Those initiatives are part of our financial discipline in allocating capital and generating value for our shareholders. The last slide, slide number 19, net revenue and value generation. In 2024, we saw a net income in consolidated basis of 2.8 billion BRLs, vis-a-vis a loss of 1.5 billion filed in 2023. The high profitability for Marfreak also appears in the generation and distribution of value for our shareholders in 2024. According to the B3 ranking, Marfreak was the company with the highest Percentage of dividend yield reaching 29.8%. And the second share, which was more appreciated at the World Baseball Index by 105%. In December 24, Marfrig paid out $2.5 billion in dividends and BRF paid out 1.1 billion BRLs in JCP for their respective shareholders. Our diversification of protein and also geographical footprint with a focus on a higher added value portfolio have combined to contribute in generating value for Marfrig's shareholders. In 2025, we continue to focus on the continuous capture of operating efficiency, cost control, and in reducing leverage, which will lead to maximizing return to all our shareholders. Thank you. Thank you. We'll now start the Q&A session. If you have a question, please click on the raise your hand button. When you are announced, you'll be prompted to unmute your mic, and then you have to click on it and ask your question. Once again, to follow in Portuguese, please click on the interpretation button and choose your preferred language. The question has been answered. Just lower your hand. Please stand by as we pull for questions. Thank you.