Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alfa SAB de CV (ALFFF, Financial) successfully transformed its conglomerate structure into four independent business units, allowing each to achieve fair valuation based on individual merits.
- The company raised $400 million in capital to reduce debt, with the capital increase being oversubscribed by more than 2.6 times.
- Alpek reported its highest quarterly comparable EBITDA since 2022, prompting an upward revision of its full-year guidance by 13% to $675 million.
- Sigma achieved an all-time high in consolidated EBITDA for the third consecutive quarter, marking its 14th consecutive quarter of year-on-year growth.
- Sigma's diverse portfolio and multi-channel distribution across 17 countries offer a unique opportunity in resilient sectors, aligning its valuation multiple with global food peers.
Negative Points
- Alfa SAB de CV (ALFFF) will no longer issue consolidated guidance following the spin-off of Alpek, creating potential uncertainty for investors.
- The company faces a temporary reclassification impact on EBITDA due to discontinued operations with Alpek, affecting comparability.
- A change in accounting methodology led to a $2 million loss in third-quarter consolidated majority net income.
- There is potential FX volatility that could impact Sigma's margins in Mexico in the fourth quarter.
- The company is still in the process of finalizing the spin-off of Alpek, which is expected to be completed in 2025, potentially delaying full realization of strategic goals.
Q & A Highlights
Q: Can you provide an update on ALFA's capital allocation and priorities, especially in light of recent news about potential acquisitions in the U.S.?
A: Eduardo Alberto Escalante Castillo, CFO, stated that ALFA is focused on completing the Alpek spin-off and capital increase. The company is committed to maintaining investment-grade ratings for ALFA, Alpek, and Sigma. Future acquisitions will be approached cautiously, and current priorities include finalizing the corporate simplification process and focusing on Sigma's operations.
Q: What is the expected tax impact of the Alpek spin-off?
A: Eduardo Alberto Escalante Castillo, CFO, explained that there is no expected fiscal impact from the Alpek spin-off. The company plans to use accumulated losses from previous operations, such as the Axtel spin-off, to offset any potential tax liabilities.
Q: What will happen to ALFA's holding structure and other assets post-Alpek spin-off?
A: Eduardo Alberto Escalante Castillo, CFO, mentioned that ALFA plans to reduce internal functions and services provided to subsidiaries, aiming for full independence of its business units. The company is also evaluating its corporate office land for potential development or sale.
Q: Can you clarify the debt structure and guarantees post-spin-off?
A: Eduardo Alberto Escalante Castillo, CFO, clarified that Sigma will guarantee $500 million of ALFA's 2044 bonds and $200 million of bank debt. The combined entity aims to maintain a leverage ratio close to 2.5x by year-end, depending on Sigma's performance.
Q: How is Sigma performing in the U.S. market, and what are the expectations for the future?
A: Roberto Olivares, Sigma's CFO, reported strong performance in the U.S., driven by growth in mainstream and Hispanic markets. The company is operating at full capacity and expects continued growth, supported by revenue management and operational efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
