Vidrala Sa

Good morning and welcome to the presentation of the results of the third quarter 2023 of Vidrala. The company will be represented by Raúl Gómez, financial director, and Íñigo Mendieta, investor relations manager. The exhibition will be held in English. In the Q&A session, questions will also be answered in Spanish. On the website www.vidrala.com You will find support documentation for this presentation, as well as a link to access the webcast. Good morning and welcome to the conference call organized by Vidrala to present its 2023 third quarter results. Vidrala will be represented in this meeting by Raúl Gómez, CFO, and Íñigo Mendieta, Head of IR. The presentation will be held in English and in the Q&A session questions will be also answered in Spanish. Nevertheless, it is strongly recommended to post questions in English in order to facilitate understanding of everyone. In the company website www.vidrala.com, you will find available a presentation that will be used as a supporting material to cover this goal, as well as a link to access the webcast. Mr Mendieta, you now have the floor.

Good morning to everyone and thank you for the time that you dedicate to attend this talk. As announced, IDRELA has published this morning its 2023 third quarter results. And additionally, we have also published the results presentation that will be used as supporting material to this conference call. Following this document, we will dedicate the first part of our exposition to briefly explain the figures released today, to devote afterwards as much time as necessary to discuss on the business performance in the Q&A session. So, starting with the main magnitudes, in the nine months of 2023, we achieved as most relevant business figures revenues of almost 1.2 billion euros, an EBITDA above 315 million euros, and a net income equivalent to an EPS of 6.01 euros. Net debt at the end of the period stood at 209 million euros, which is equivalent to a leverage ratio of 0.5 times the reported EBITDA. Turning to slide four, we look at the top line performance, analyzing the annual variation of revenue broken down by concepts. We arrived at the reported figure of 1.194 million euros, that as it is shown in the graph is the result of 18.6% growth on a constant currency basis. Volumes were down minus 6%, considering a positive contribution of the part of plus 2% in the first nine months, while price mix effect was up 24%. Following the order of key business figures referred to at the beginning, we analyzed with the same breakdown the variation of operating income. 2023 nine months EBITDA amounted to 315.6 million euros, reflecting a constant currency growth of 100.1%. These operating figures resulted in an operating margin EBITDA over sales of 26.4%. which represents an expansion of more than 10 percentage points compared to the 15.6% registered in the previous year that was, as we all know, affected by unprecedented inflationary pressures. Let's analyze now the pre-cash flow generation in detail. We will do so with the help of the chart on slide eight, which reconstruct the cash conversion year to date. So, starting from an EBITDA margin of 26.4%, we have dedicated 9.9% of sales to investments and another 9.0% to the aggregate of working capital, financials and taxes. Still affected by exceptional working capital movements that are already reverting as anticipated. Finally, net debt at the end of the reported period closed at 209 million euros. This figure is the consequence of the just mentioned cash generation, our firm commitment to shareholder remuneration and the cash out for the acquisition of the park and the non-controlling minority stake in the share capital of Vidroport. As a result, leverage ratio stands at 0.5 times EBIT. And now before turning to the Q&A session, I pass the word to Raúl so that he can strike the main conclusions and make additional comments that he considers appropriate.

Good morning, everyone. Thank you, Inigo, and thank you all for your time attending this call today. Well, we are today publishing results that are an evidence of our business profile. I mean, under a weaker than expected demand context, We have recovered margins and we are expanding profits and making the expected level of cash. Consistent with this, we do reiterate our previous guidance. So our revenue for the full year 2023 will grow by double digits. And we still expect our margins to remain in line with our 25% EBITDA over sales target. We also see our profits reaching the expected level of 7 euros per share. And finally, we should generate more than 150 million euros of free cash in the full year, in the 12 months period. More. The more intense macroeconomic uncertainties we are living, that let me say, let me remark that despite the recent volatility seen in packaging demand, shouldn't or won't change the long-term natural resilience of our business. Anyway, I was saying this certain weakness, will make us adapt the capacity, control inventories, and put our focus on keeping our margins under control. But much more important, under our view, this context further provides the credit deserved to the rationale of our recent strategic actions. A study of actions that will make us grow and diversify the business and secure higher margins, profits, and cash returns. Let me remind that we, at the beginning of the year, acquired the filling facilities in the UK, named The Park. And as a result, we are capturing new sales, we are improving our knowledge about the fundamentals of the packaging industry, and we are intensifying long-term partnership with customers that are strategic, making our business and our subsidiary in the UK and CERC an even more different packaging player with a unique, it's unique in the world, customer service approach. And maybe even more important today, under current conditions, we are, this is a big thing for us, we are entering a new market in Brazil through the acquisition of Vitraport that will offer us opportunities to grow that are becoming particularly valuable today under a more modest demand context. And finally, we are executing all this, maintaining a, I would say, quite solid financial position. Thank you. Inigo, we may now go directly to the Q&A.