ALFA reports 1Q21 EBITDA of US $535 million; second highest quarterly figure in our history

MONTERREY, Mexico, April 20, 2021 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) (ALFA), manages a diversified portfolio of subsidiaries with global operations announced today its unaudited results for the first quarter of 2021 ("1Q21"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

1Q21 HIGHLIGHTS

ALFA	2021 EBITDA Guidance revised up 13% to US $1.637 billion due to stronger Alpek outlook Obtained approval to expand ALFA's foreign neutral investment trust from 50% to 75%. New limit expected to be enacted shortly as other required approvals are underway Leverage ratio (Net Debt / EBITDA) of 2.9x; below 3.0x for the first time since the beginning of the pandemic
Sigma	EBITDA up 7% y-o-y driven by growth in Europe (+51%), Latam (+13%) and Mexico (+3%) Foodservice channel recovery trend accelerated in March amid increased mobility Launched second generation call-out to startups via "Tastech" program. Invested in a minority stake in Latam startup selected among first generation participants
Alpek	1Q21 Comparable EBITDA of US $203 million (+38% y-o-y), driven primarily by strong volume and higher than expected reference margins 2021 EBITDA Guidance revised up 34% to US $750 million based on strong 1Q21 results and improved outlook Announced JV to develop CO2 capture & liquefaction facility in Mexico; first carbon negative asset
Axtel	Actively engaging with potential buyers who have shown interest for its Infrastructure unit 1Q21 EBITDA on track with full-year guidance

Message from ALFA's President

"We hope that you and your families are staying safe and healthy. 1Q21 results reflect a strong start for the year, extending the positive momentum from previous quarters as the global economy continues to recover. ALFA achieved better-than-expected Revenue and EBITDA driven primarily by outstanding performance at Alpek. 1Q21 Consolidated EBITDA of US $535 million is the second highest quarterly figure in our history.

Sigma is on track with its full-year target supported by a 51% year on year increase in EBITDA from Europe and a steeper Foodservice channel recovery trend observed in March. Axtel's results are also in line with its 2021 EBITDA Guidance. Whereas, Alpek exceeded expectations by capitalizing on strong volume, higher reference polyester and polypropylene margins, a favorable rise in oil and feedstock prices, and temporary disruptions caused by the polar vortex affecting the U.S. Gulf Coast.

As a result, full-year EBITDA Guidance for Alpek and ALFA has been revised up to reflect a more positive view on certain key variables for the remainder of the year. ALFA's new 2021 EBITDA guidance is US $1.637 billion.

The first quarter was also marked by progress on top Corporate priorities, including: i) expanding the "Nafinsa Trust" to allow for higher foreign ownership of ALFA shares and ii) our Unlocking Value strategy.

We recently obtained the required approval to expand ALFA's foreign neutral investment trust, which is also known as the "Nafinsa Trust". The Foreign Investment Directorship of the Mexican Ministry of Economy authorized to increase the maximum threshold of the "Nafinsa Trust" from 50% to 75% of ALFA's total shares. The next steps include an amendment to the Trust and certain authorizations from the National Banking and Securities Commission (CNBV). We expect to enact the new 75% limit shortly.

In addition, we reaffirmed our commitment with shareholders at our recent Annual Meeting to continue moving forward with our gradual and orderly transformational process towards fully independent businesses to unlock ALFA's high value potential, based on three key implementation directives: 1) Reduce debt, 2) Focus on core businesses, and 3) Enhance business independence.

1.	Reduce debt. Deleveraging is imperative as we go through the transformation process. Our goal is to reach a 2.5x Net Debt/EBITDA target through strategic initiatives and organic cash flow generation. We remain committed to reducing debt through the potential sale of Axtel or other strategic alternatives. Axtel is actively engaged with potential buyers who have shown interest for its Infrastructure unit. Better than expected 1Q21 EBITDA is also important for this key implementation directive. This is the first time since the onset of the pandemic that Alfa's consolidated leverage was below 3.0 times, supported by Alpek at 1.6x and Sigma at 2.6x.
2.	Focus on core businesses. Supporting growth and business-enhancing initiatives at Sigma, Alpek and Axtel is important to boost underlying value amid ALFA's transformation process. Sigma is diligently implementing a comprehensive plan to achieve the full potential of its European operations; targeting a double-digit EBITDA margin by 2025. The Company expects to achieve this through portfolio optimization, ongoing operational efficiencies and pursuing high-growth opportunities.
	As part of its innovation pipeline, Sigma recently launched its second-generation call-out of "Tastech", challenging startups and other smaller companies in three areas: i) Future food, ii) Green tech, and iii) Power connections. We are excited by the prospects of this initiative after Sigma received more than 120 submissions from the first generation, and invested during 1Q21 in a minority stake in The Live Green Co., a LATAM startup that blends plant nutrition, biotech and machine learning to develop plant-based foods of the future.
	Alpek announced a JV with ContourGlobal to develop a 70,000-ton CO2 recovery & liquefication facility in Mexico to meet the increasing demand for food-grade CO2 while at the same time reducing the Company's carbon footprint. On the financial front, Alpek successfully issued a 10-year US $600 million bond at a record-low 3.25% coupon. The average maturity of Alpek's debt was extended from 4.4 to 7.2 years as proceeds were used to refinance shorter term debt.
3.	Enhance business independence. Nemak was our first business to become fully independent, and we had the opportunity to celebrate this milestone with our shareholders at the Annual Meeting. Going forward, the focus is for individual businesses to achieve service-related independence from ALFA while we reach our target leverage ratio. A joint analysis between ALFA and each of its businesses is underway to determine the most appropriate allocation and effective transition of shared service capabilities.

Our capital allocation strategy includes a comprehensive approach to balance deleveraging, growth and returning value to our shareholders. During our recent Annual Meeting, shareholders approved a cash dividend of US $98 million, which was paid on April 7, 2021. This was in addition to the US $25 million dividend paid in January 2021. Shareholders also approved a maximum amount of Ps $5,800 million (approximately US $280 million) for share buybacks. Buybacks have been another means through which we have provided value to our shareholders as we believe the current share price does not adequately reflect the fundamentals and long-term growth prospects of the business. Lastly, shareholders approved the cancellation of all ALFA shares held at Treasury (145.9 million shares) - ALFA effectively transferred a benefit to shareholders that was equivalent to 2.9% of total shares.

The strong start for 2021 reinforces our positive view on the prospects of the ongoing recovery. We look forward to continue building upon the positive momentum of recent operational results and consistent progress with our strategic initiatives amid better than expected macro conditions."

Keep well/Stay safe,

Álvaro Fernández

 

SELECTED FINANCIAL INFORMATION (US $ Millions)
	1Q21	4Q20	1Q20	Ch. % vs. 4Q20	Ch. % vs. 1Q20
ALFA & Subs with Nemak as Discontinued Operations
ALFA Revenues	3,388	3,218	3,261	5	4
Alpek	1,614	1,392	1,433	16	13
Sigma	1,613	1,662	1,637	(3)	(1)
Axtel	140	150	157	(7)	(11)
ALFA EBITDA1	535	419	415	28	29
Alpek	324	201	111	61	193
Sigma	181	178	169	2	7
Axtel	45	51	156	(12)	(71)
Majority Net Income2	154	(63)	170	346	(10)
CAPEX & Acquisitions3	79	165	82	(52)	(4)
Net Debt4	4,864	4,699	6,323	4	(23)
Net Debt/LTM EBITDA5	2.9	3.1	3.0
LTM Interest Coverage6	4.3	4.4	4.7

1 EBITDA = Operating Income + depreciation and amortization + impairment of assets.

2 Majority Net Income includes Majority Net Income from Discontinued Operations (Nemak).

3 Gross amount; excludes divestments and Capex from Discontinued Operations (Nemak).

4 Net Debt adjusted for Discontinued Operations (excluding Nemak) at the close of 3Q20; previous periods unchanged. As reference, 1Q20 Net Debt includes US $1.210 billion from Nemak.

5 Times. LTM = Last 12 months. Ratio calculated with Discontinued Operations for all periods.

6 Times. LTM = Last 12 months. Interest Coverage = EBITDA/Net Financial Expenses with Discontinued Operations.

 

1Q21 EARNINGS CALL INFORMATION
Date:	Wednesday, April 21, 2021
Time:	1:00 p.m. EDT (NY) / 12:00 p.m. CDT (CDMX)
By Phone:	United States:  +1-877-451-6152
	International:    +1-201-389-0879
	Mexico:            800-522-0034
Conference ID: 13718399
Webcast:	http://public.viavid.com/index.php?id=144229
Replay:	https://www.alfa.com.mx/RI/conference.htm

About ALFA

ALFA a company that has developed a diversified portfolio of leading businesses with global operations: Sigma, a leading multinational food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Alpek, one of the world's largest producers of polyester (PTA, PET and fibers), and the leader in the Mexican market for polypropylene, expandable polystyrene (EPS) and caprolactam. Axtel, a provider of Information Technology and Communication services for the enterprise and government segments in Mexico. Newpek, an oil and gas exploration and production company with operations in Mexico. In 2020, ALFA reported revenues of Ps. 263,867 million (US $12.3 billion), and EBITDA of Ps. 32,597 million (US $1.5 billion). ALFA's shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange. For more information, please visit www.alfa.com.mx

Disclaimer

This release may contain forward-looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. These uncertainties include, but are not limited to, risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, availability of workers and contractors due to illness and stay at home orders, supply chain disruptions and other impacts to the business, or on the Company's ability to execute business continuity plans, as a result thereof. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information. Figures are presented in Mexican Pesos or US Dollars, as indicated. Where applicable, Peso amounts were translated into US Dollars using the average exchange rate of the months during which the operations were recorded. Financial ratios are calculated in US Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.

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SOURCE ALFA, S.A.B. de C.V.