Vidrala Sa

Buenas tardes y bienvenidos a la presentación de resultados del primer trimestre de 2024 de Vidrala. La compañía estará representada por Raúl Gómez, próximo CEO, e Íñigo Mendíata, responsable de relación con inversores. La exposición se realizará en inglés. En el turno de preguntas se atenderán también preguntas en castellano. Good afternoon and welcome to the conference call organized by Vidrala to present its 2024 first quarter's results. Vidrala will be represented in this meeting by Raúl Gómez, incoming CEO, and Íñigo Mendieta, head of IA. The presentation will be held in English. In the Q&A session, questions will be also answered in Spanish. Nevertheless, it is strongly recommended to pose 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 call, as well as a link to access the webcast. Mr. Mendieta, you now have the floor.

Thank you. Good afternoon to everyone, and thank you for the time that you dedicate to attend this call. As announced, Vidrala has published this morning its 2024 first quarter results, and additionally we have also published the results presentation that will be used as supporting material to this conference call. As always, 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 first quarter of 2024, we achieved as most relevant business figures revenues above 419 million euros, an EBITDA of almost 110 million euros, and a net income equivalent to an EPS earnings per share of 1.64 euros. Net debt at the end of the period stood at 530 million euros, which is equivalent to a leverage ratio of 1.2 times the Performa EBITDA. Performa EBITDA that considers the contribution of the last 12 months of the report. Turning to slide 4, we look at the top-line performance, analyzing the annual variation of revenue broken down by concepts to arrive at the reported figure of 419.4 million euros. As it is shown in the graph, this figure is the result of a 1.4% growth at constant currency and comparable scope. Volumes were up in the range of 10%, mostly offset by a minus 9% price mix effect. Scope, which aggregates the combined effect of the incorporation of 2023 year-to-date results of the report, and the exclusion of Viverla Italia since the 1st of March 2024, again, this scope effect contributed an additional 8% to revenue growth. Following the order of key business figures referred to at the beginning, we analyze, with the same breakdown, the variation of operating income. 2024 first quarter EBITDA amounted to 109.8 million euros, reflecting a minus 4.7 organic year-on-year variation, which was more than compensated by the scope contribution. These operating figures resulted in an EBITDA margin, EBITDA over sales, of 26.2%, which represents a contraction of approximately 40 basis points, compared to 26.6 registered in the previous year. In this slide, on slide 7, we present the distribution of sales and EBITDA by business units under the new perimeter, that is, including BIDROPORTO in 2023 figures, and fully excluding the results of Israel-Italia in 2024. Although, as you know, Italy has contributed to reported sales, and it did that in the first two months of 2024. And from March on, it will be reported as discontinued operations, contributing to net profit until the sale becomes effective. So the graph shows a weak performance in Iberia, negatively affected by price adaptations, still sub-optimal cost absorption due to lower production, and also partially the calendar effect regarding base decision. Results in this division should progressively improve as comparison basis becomes easier towards the second half of the year. The UK continues to do well, supported by new demand for glass containers we are creating through the filling business and integration of the park, And Brazil experiences the second-round effects of the recent capacity expansion project in the Southeast Unit in operations since mid-2023. Finally, we analyze free cash flow generation in detail with the help of this chart on slide 8 that reconstructs the cash conversion accumulated for the last 12 months in order to fully normalize our annual cash profile. So, starting from an EBITDA margin of 25.2%, we have dedicated 9.6% of sales to investment, and another 4.5% to the aggregate of working capital, financials and taxes. As a result, free cash flow generation stands above 11% of sales, And also, consequently, net debt at the end of March 2024 flows at 529.7 million euros, including this figure, the payments for recent M&A transaction, and incorporating also the acquired debt. And now, before turning to the Q&A session, I pass the word to Raúl so that he can extract main conclusions or highlights and make additional comments that he considers appropriate.

Thank you, Inigo, for the huge job. And thank you all for attending this call today. We really appreciate your time in a slightly different time slot than usual. You know, today is a busy day for us as we held our annual general meeting, an event that marks an opportunity to make public for you our outlook for the full year, an outlook for the full year that we will surely discuss during this conference. Well, our results published today for the first quarter of 2024 probably help us to start putting on evidence the strong fundamentals of our business as it is today. And our business today is different. We now manage three different separated business units in three different geographies after a conscious and clear refocusing of our business in today's markets. three different areas that, under my view, create a great business combination. As an example of this, let me explain this with more detail. Let's see our results published today. First, in our most traditional markets, in Iberia and Southwest Europe, we have been able to sustain our profits despite having been forced to reduce our utilization rates a minimum levels rarely seen before, in order to adapt to our inventories after the sharp drop in demand seen last year. Yes, it's true that we are seeing our demand in this area showing some signs of recovery, but demand is still weaker than and far from expected a year ago, and our prices are progressively being adapted downwards to the new inflationary conditions. So this is a context, our margins in this region that put into value our results, because our results are grounded on internal actions, on our competitiveness and on the benefits obtained from our capacity realignment plan executed during the last three or four years. In our mind, that means that the high operating profit levels achieved last year in this region, in this unit, remain safe. Second, in the UK and Ireland, we are there progressively capturing demand as a result of the contribution of the additional boat lane activity acquired a year ago. You probably remember that. That means that our business in the UK and Ireland is an even more unique case in the packaging industry that offers a unique range of services that help us grow the business despite the demand context there. the UK and Ireland is as mature as it is in Europe. So in this region, our operating profits are expected to keep on expanding from the current levels, and our margins consequently should be higher at the end of this year than they are today. And third, and obviously more important for us, in Brazil we are living, as expected, a completely different business context, a context of real growth. a contest of sales volume growth after the expansionary investments made in 2023. The performance of the business we can see in Vidroporto evidenced the quality of the decisions made in the past and the rationale behind our entry into Brazil. We announced a month ago, you probably remember that, that Vidroporto should see a growth on EBITDA in value this year of more than 25%. And we are obviously on track to exceed this number. As we are executing scenarios rapidly, the business is probably to be quite competitive as expected. Our customers are responding well to the new capacity. And I would say the overall consumer environment in Brazil remains quite solid. So, under this context, we today communicate our annual official outlook for casting and EBITDA value for the full year 2024 above 450 million euros. After, as Inigo said before, having discontinued the Italian business since the end of February this year. And we are also announcing a forecast of an annual free cash flow generation of more than 180 million euros. Despite our organic capex will deliberately remain at high and ambitious levels, to better prepare the business for the future. So, in our conclusion, this business performance shows the first effects of an strategic plan that has been firmly directed to diversify the business towards new growing regions, to expand differential services, as an example of what we did in the UK, to realign our industrial footprint and to selectively enhance our manufacturing facilities with our customer in mind and a clear focus on making our products and supplying our services in the most sustainable way. We at Hidrala are today a different and stronger company. With leading competitive positions, we're focused on three clearly strategic and core markets. And we have been able to accelerate this progress maintaining a strict capital discipline, as it is shown in our solid financial position and in our leverage rate. A financial position that will boost us to remain dynamic, prepare to invest organically to create an industrial future, and prepare to continue returning cash to our shareholders in an attractive manner. That ends my exposition. Thank you.