ALFA reports 3Q21 EBITDA of US $486 million; record US $1.5 billion EBITDA in the first nine months of the year

MONTERREY, Mexico, Oct. 20, 2021 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) ("ALFA"), a company that has developed a diversified portfolio of leading businesses with global operations, announced today its unaudited results for the third quarter of 2021 ("3Q21"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

3Q21 HIGHLIGHTS

ALFA	2021 EBITDA Guidance revised up 10% to US $1.937 billion driven by Alpek Record accumulated EBITDA of US $1.517 billion Consolidated net leverage ratio of 2.5x; lowest since 2018
Alpek	2021 EBITDA Guidance revised up 19% to US $1.050 billion 3Q21 Comparable EBITDA of US $234 million (+52% y-o-y) boosted primarily by record volume and better-than-expected margins in the Plastics & Chemicals segment Targets set for all material ESG issues, including Circularity and CO2 emissions
Sigma	3Q21 EBITDA of US $176 million, down 2% y-o-y as growth in Mexico and Latam was offset by the U.S. and Europe Foodservice channel EBITDA 9x higher year-on-year and up 11% versus 3Q19 Profitability enhancement initiatives in Europe moving forward – signed agreement to sell operations in Belgium and the Netherlands
Axtel	3Q21 EBITDA of US $46 million, down 7% y-o-y mainly due to lower Government segment sales and delays in project implementation due to limited availability of equipment amid the global semiconductor shortage Strong acquisition rate of highly specialized services year to date versus first nine months of 2020: Cybersecurity +13%, Cloud +72% and Systems Integration +29% Year-to-date EBITDA in line with Guidance

Message from ALFA's President

"We hope you and your families have all remained healthy and safe. It has been encouraging to see the decline in COVID-19 cases around the world, following the resurgence during the third quarter related to the Delta variant.

Our businesses continue to demonstrate an ability to successfully operate in a highly dynamic and fluid macro environment. ALFA delivered double-digit top line and EBITDA growth amid supply chain shortages and inflationary pressures affecting the global economy. Quarterly revenue advanced 30% and EBITDA was up 11% versus 3Q20, driven by a strong performance from Alpek. Moreover, ALFA's accumulated EBITDA through September reached a record US $1.517 billion, putting us on track to exceed our full-year guidance of US $1.767 billion.

Alpek once again delivered better-than-expected EBITDA, boosted by sustained margin strength. Year- to-date results at Sigma and Axtel are in line with their respective EBITDA estimations. Effective revenue management and a rapid Foodservice channel recovery offset raw material cost pressures and other supply chain headwinds faced by Sigma. Axtel benefitted from a stronger-than-expected Mexican Peso as the Government segment continued to weigh on its Service business unit.

For the remainder of the year, Alpek expects to continue capitalizing on a favorable margin environment, raising its 2021 EBITDA guidance by US $170 million to a record US $1.050 billion. Sigma and Axtel maintained previously announced EBITDA guidance figures. At the ALFA level, the latest estimations result in a new 2021 EBITDA Guidance of US $1.937 billion - the second highest figure in our history.

In addition to our solid operating performance, we continue to advance on the three key components of our Unlocking Value Strategy: reducing leverage, focusing on the core businesses and enhancing business independence.

i)	Reducing leverage: A fundamental aspect to unlocking ALFA's full value potential is ensuring that our capital structure is appropriately balanced throughout the transformation process. 3Q21 marks an important milestone as ALFA posted consolidated Net Debt to EBITDA of 2.5x for the first time since 2018, driven in part by Alpek's low leverage of 1.2x.
	Moreover, we are committed to accelerating deleverage through strategic initiatives such as the potential sale of Axtel. The Axtel team continues to be actively engaged with potential buyers. However, it is important to note that ALFA´s Unlocking Value Strategy will continue moving forward in any scenario supported by additional options to achieve our leverage target.
ii)	Focusing on the core businesses: Throughout the transformation process, the business units have been undertaking important initiatives to boost their underlying value.
	Sigma advanced on its comprehensive plan to enhance profitability in Europe by signing an agreement to sell its operations in Belgium and the Netherlands to Ter Beke Group. This transaction will allow the Company to concentrate on core European markets, complementing a broad range of initiatives being implemented to achieve its double-digit EBITDA margin target in the region.
	Alpek concluded the first phase of a comprehensive ESG effort known as "Project Evergreen", focused on setting ambition levels and aligning the Company to achieve specific targets related to each of its 12 material issues. Regarding "Carbon emissions & eco-efficiency", Alpek is committed to the Paris Agreement, 27.5% reduction in Scope 1 and 2 emissions by 2030 (2019 base) and carbon neutrality by 2050. On "Circularity (PET)", the Company plans to increase its PET bottle recycling capacity to 300 ktons by 2025 to meet customers' recycled content needs. We invite you to review Alpek's full set of targets at: www.alpek.com/ESG/Targets
	Axtel launched "Alestra Móvil", the first "Mobile Virtual Network Operator" (MVNO) in Mexico through a partnership with AT&T Mexico. This enhances the Company's wide solutions offering with new mobility services to customers.
iii)	Enhancing business independence: We celebrate the merger of Nemak and Controladora Nemak, effective September 6th, which marks the successful completion of a multi-stage process that initiated with the announcement of ALFA's Unlocking Value Strategy in 3Q20.
	At the corporate level, we remain focused on supporting our individual businesses to achieve service-related independence from ALFA. An important part of this effort involves the gradual transfer of personnel from ALFA to its Subsidiaries. ALFA Corporate headcount is down 14% year- to-date as we continue to make progress on this front.

In closing, I would like to extend my sincerest thanks to our team members around the world for their collective efforts to reach our financial, operational and strategic goals. We are on track to close 2021 on a strong footing to continue with our orderly transformation process."

Keep well/Stay safe,

Álvaro Fernández

SELECTED FINANCIAL INFORMATION (US $ MILLIONS)

	3Q21	2Q21	3Q20	Ch. % vs. 2Q21	Ch. % vs. 3Q20	YTD `21	YTD `20	Ch. %
ALFA & Subs with Nemak as Discontinued Operations
ALFA Revenues	3,976	3,731	3,057	7	30	11,095	9,107	22
Alpek	2,082	1,849	1,325	13	57	5,545	3,933	41
Sigma	1,729	1,707	1,577	1	10	5,049	4,684	8
Axtel	138	149	140	(7)	(2)	426	429	(1)
ALFA EBITDA1	486	496	438	(2)	11	1,517	1,117	36
Alpek	279	273	179	2	56	876	364	141
Sigma	176	182	179	(3)	(2)	540	506	7
Axtel	46	57	49	(20)	(7)	148	257	(43)
ALFA Comparable EBITDA2	440	449	365	(2)	21	1,303	1,044	25
Alpek	234	225	154	4	52	662	450	47
Sigma	176	182	179	(3)	(2)	540	506	7
Axtel	46	57	49	(20)	(7)	148	146	1
Majority Net Income3	125	99	171	25	(27)	378	253	49
CAPEX & Acquisitions4	107	183	67	41	60	369	234	58
Net Debt5	4,875	4,811	4,894	1	-	4,875	4,894	-
Alpek	1,323	1,247	1,235	6	7	1,323	1,235	7
Sigma	1,692	1,728	1,930	(2)	(12)	1,692	1,930	(12)
Axtel	613	625	595	(2)	3	613	595	3
ALFA Net Debt/LTM EBITDA6	2.5	2.6	3.0
ALFA LTM Interest Coverage7	5.2	5.0	4.4

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

2 Excludes extraordinary items.

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

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

5 Net Debt adjusted for Discontinued Operations (excluding Nemak) at the close of 3Q20; previous periods unchanged.

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

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

 

3Q21 EARNINGS CALL INFORMATION
Date:	Thursday, October 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:	13723382
Webcast:	http://public.viavid.com/index.php?id=146612
Replay:	https://www.alfa.com.mx/RI/conference.htm

Contact
Hernán F. Lozano
V.P. of Investor Relations ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
iralfa@alfa.com.mx

Carolina Alvear
Corporate Communication Director ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
comunicacion@alfa.com.mx

About ALFA

ALFA manages 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. 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.