Alfa SAB de CV

BMV:ALFAA

Earnings Call Transcript 2019-Q4

[Operator]

Good afternoon, and welcome to ALFA's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

Now I would like to turn the conference over to Mr. Hernan Lozano, Vice President of Investor Relations and Corporate Communications. Mr. Lozano, you may begin.

[Hernan Lozano, executive]

Thank you. Good afternoon, everyone, and welcome to ALFA's Fourth Quarter 2019 Earnings Conference Call. Additional details about our quarterly and full year results can be found in our press release, which was distributed yesterday afternoon, together with a summarized presentation, which we hope will serve as a useful reference to complement today's call. Both documents are available on our website in the Investor Relations section.

As a reminder, during this call, we will share forward-looking information and statements, which are based on variables and assumptions that are uncertain at this time. Therefore, actual results could vary materially and the company cautions not to rely unduly on these forward-looking statements.

During today's call, Eduardo Escalante, our CFO, will discuss ALFA's consolidated financial results, provide key highlights for the individual businesses and comment on 2020 guidance. Afterwards, we will have a Q&A session, where we will take all your questions together with the CFOs from each business.

I will now turn the call over to Eduardo.

[Eduardo Alberto Castillo, executive]

Thank you, Hernan. Good afternoon, everyone, and thank you for joining our call today. 2019 was a significant year for ALFA as the company successfully executed on strategic priorities that has strengthened our overall financial position and laid the foundation for future growth. This included selected noncore asset monetization, innovation in high-growth market segments, business realignment, expansion and value distribution to our shareholders.

Noncore asset monetizations are key to lower our leverage and maximize our return on invested capital. Alpek and Axtel, completed their planned divestments at very attractive valuation, generating proceeds of $1.3 billion from 4Q '18 to 4Q '19.

During the fourth quarter, Alpek closed the $801 million sale of its 2 power cogeneration facilities to continue global. From a financial standpoint, this transaction is strengthening Alpek balance sheet to continue executing its long-term strategy. From an operational standpoint, Alpek and several ALFA companies in Mexico will continue to benefit from the planned competitive and stable power supply, power and steel supply.

Also in 4Q '19, Axtel monetized 3 data centers as part of a $175 million agreement with Equinix, which also enhances this multi-cloud and Information and Communication Technology, ICT, managed services portfolio. Together with this agreement, Axtel completed the sale of its mass-market business in 2 transactions that totaled almost $300 million between 4Q '18 and 2Q '19. This mass-market business was valuated at more than 7.5x, while the Equinix agreement implies a double-digit valuation compared with Axtel's average EBITDA multiple of close to 5x throughout the year.

Another area of focus for [ ALFA's ] businesses was innovation and expanding capabilities in high-growth market segments. In particular, at Sigma and Nemak. Innovation is key for Sigma to stay ahead of consumer preferences. To that end, the company carries out more than 260,000 consumer contacts per year, which translates into new product launches supported by a team of over 200 specialists, 2 research centers and 6 pilot plants.

Sigma launched more than 270 new products through its innovation platform in 2019 and has more than 740 products under development. Products launched over the past 3 years accounted for 11% of revenue last year. This included plant-based protein products under the Campofrio Regalia brand name among others. Sigma also complemented its in-house capabilities with the launch of Tastech by Sigma, a program to accelerate innovation through disruptive startups and emerging growth companies from around the world.

The company received more than 120 applications from more than 20 countries and selected 8 as start-up for pilot test that are being implemented and will be evaluated in 2Q 2020. In addition, Sigma launched its new Global Snacking business unit to tap into the growing trend for protein-based snack. Global Snacking will work across geographies and leverage Sigma's innovation and commercial capabilities to boost this category, $172 million in sales.

On the other hand, Nemak is leveraging its innovation capabilities to be at the forefront of its customers' effort towards a more sustainable mobility. During 2019, the company supply to e-mobility and structural applications to Audi, BMW, Daimler, Fiat Chrysler, Ford and Porsche.

Approximately 25% of Nemak's CapEx investment in 2019 was dedicated to expanding its capabilities to reinforce its leading position in this growing business line. In fact, Nemak recently completed the construction and is currently [ installing ] the agreement to begin operations of its first plant in North America, dedicated 100% to assembly processes for electric vehicle components.

Next, let me share with you a few highlights on business realignment and how we believe we would also apply shareholder value, especially related to Axtel and Nemak.

Axtel has been diligently implementing this functional separation into 2 business units, in line with the industry trends. Under the new structure, the company is comprised of a pure-play infrastructure, operator and a separate service unit. On the one hand, wholesale customers will have access to Axtel's infrastructure unit which operates the largest neutral network in Mexico. The company's existing assets and the vast potential for expansion, provide a unique platform for attractive, stable and sustainable long-term cash flow generation. This is a compelling opportunity for long-term infrastructure investment. Moreover, the infrastructure unit, EBITDA generation of $119 million in 2019, coupled with the high double-digit valuation multiple for these type of businesses, imply a value that is higher than all the monetizations we completed between 4Q '18 and 4Q '19 combined.

On the other hand, the service unit, Alestra is the second largest ICT provider in the Mexican B2B market. The service unit now operates under a simplified model backed by a long-term contract that guarantees full access to the infrastructure unit network.

Axtel has recently started a formal process supported by financial advisers to attract investment proposals and evaluate strategic alternatives. We are excited by the prospects of the attractive opportunity that this initiative could unlock for Axtel and ALFA going forward.

Another business realignment initiative is related to Newpek. We are evaluating strategic alternatives for its assets outside of Mexico, as we remain committed to exiting this business.

Moving on to expansion. Alpek acquired 2 new businesses that enhance its PET capability. It is important to note that PET's 100% recyclable and is already the most recycled plastic in the world. Another key consideration among its many other benefits is its low carbon footprint, one PET bottle generate 80% less carbon emissions than bottles manufacturer from glass or aluminum. We believe that PET will continue to be the material of choice for beverage packaging based on its value proposition and environmental advantages.

In line with this goal of promoting a circular economy, Alpek acquired a recycling facility in the U.S., which raised its total recycled PET capacity by 60% in early 2019. The company now operates the largest recycling capacity among PET producers in the Americas. In 4Q '19, Alpek reached an agreement to acquire a 350,000 tons PET facility in the U.K., it's first facility outside the Americas, increasing speed to capacity by [ 14% ]. This acquisition is aligned with the company's long-term strategy as it provides the balance between our PTA and PET capacity.

Lastly, value distribution to our shareholders played a big role in 2019, especially in light of our current share price, which we believe does not reflect ALFA's solid business fundamentals and future growth prospects. 2019, $202 million dividend was a record high for ALFA. Dollar-denominated dividends are a fundamental part of ALFA's value proposition to shareholders. We have paid dividends constantly over the past 2 decades, and payments have grown at a 15% compounded annual growth rate in dollar terms during the last decade, supported by our diversified portfolio of leading cash-generating businesses and financial discipline.

We also have a share buyback program in place. Since its approval at the last shareholder meeting, we have purchased $37 million worth of shares. Moreover, we can sell 145 million shares valued at $165 million as announced in 1Q '19.

In total, these 3 actions represent a $404 million aggregated benefit to ALFA shareholders in 2019, which represents more than 10% of ALFA's current market cap.

Moving now on to a discussion of fourth quarter and annual results. As a reminder, more detailed financial information on the quarter for Alpek, Nemak and Axtel was provided by each of them during their respective conference calls earlier today. 4Q '19 revenue was $4.3 billion, down 9% versus 4Q '18, primarily due to lower feedstock prices in Alpek and lower volume in Nemak, which was impacted by the General Motors strike in the U.S.

Yet Sigma revenues were up 7%, supported by sales growth in all regions. Moreover, Axtel's revenues were up 1%, when adjusting for the effect of its Mass Market business sale.

Accumulated revenues were 8% lower year-over-year, totaling $7.5 billion, reflecting similar conditions throughout the year.

Moving on, 4Q '19 reported EBITDA of $636 million was the highest quarterly figure in the year, driven by the extraordinary gain from the sale of Alpek's cogeneration power plant. Fourth quarter EBITDA includes a $122 million net gain from extraordinary items purchased the $188 million benefit from the Cogen sale and expense provisions of $58 million in [ Europe ].

In accordance with IFRS, we recognized noncash expense provision related to Newpek's lower production outlook in coming years as we actively evaluate the strategic alternatives for its asset outside Mexico.

When comparing quarterly EBITDA year-over-year, it is also important to note that 4Q '18 benefited from a $322 million net gain from extraordinary items, such as Alpek's gain on business combination in the PQS Brazil acquisition and Axtel Mass Market sales gain.

Adjusting for extraordinary items, comparable ALFA EBITDA was $540 million in 4Q '19, versus $565 million in 4Q '18, primarily due to lower volume in Nemak.

Nemak. Nemak's fourth quarter EBITDA reflect lower-than-expected shipments as a result of GM's 6-week strike in the U.S. Operations normalizing during November. Nevertheless, Nemak was able to mitigate the impact of these extraordinary events and reached its full year guidance, supported by ongoing optimization efforts globally. The Nemak team did an outstanding job of adjusting their cost structure throughout the year.

Moreover, Sigma posted 1% EBITDA growth in the fourth quarter, driven by 22% growth in the U.S. and 7% growth in Mexico, which was offset by Europe and in rising [ core ] prices due to ASF.

Additionally, Axtel's 4Q '19, EBITDA was up 11% year-over-year when adjusting for discontinued operations, driven primarily by automation and digitalization initiatives, which translated into operating cost savings.

Accumulated comparable ALFA EBITDA was $2.2 billion, down 10% versus 2018. On an adjusted basis, to make the figures comparable with our full year guidance, which included the Cogen sale gain, 2019 EBITDA of $2.4 billion was generally in line despite external headwinds. Sigma posted 4% comparable EBITDA growth as the company effectively mitigated the impact of ASF through multiple targeted actions including price increases. Alpek was in line with its full year guidance despite an unfavorably low stock price environment. Nemak's EBITDA was also in line with full year guidance as softer-than-expected industry conditions plus GM strike were offset by operating efficiency initiatives that resulted in relatively stable EBITDA per equivalent unit throughout the year despite a double-digit decrease in volume. Axtel posted better-than-expected EBITDA also driven by operating efficiency while Newpek's results reflect a lower-than-expected drilling [ program ].

Looking at the balance sheet. Consolidated net debt was down quarter-on-quarter and year-on-year, supported by solid operating cash flow generation in addition to the proceeds from the selective monetization of noncore assets. This was the third consecutive quarter that consolidated net debt was down sequentially.

Excluding the impact from the adoption of a new accounting standard for leases, IFRS 16 that began in January, net debt was down $757 million or 12% versus year-end 2018. In sum, we are pleased with our accomplishments and overall progress in 2019. Also, we are excited by the projects and value-enhancing initiatives around the way across our business.

Let me close with a brief overview of our 2020 guidance. The underlying macroeconomic assumptions were included in the guidance, press release and presentation issued earlier. Also, Alpek, Nemak and Axtel discussed their individual guidance in more detail during their conference calls this morning. On a consolidated basis, we are estimating total revenue of $17 billion, EBITDA is projected at $2 billion and CapEx of $902 million.

The estimated 3% year-over-year reduction in ALFA revenues is largely driven by Alpek, which anticipate a 9% decrease in sales despite a 6% increase in volume. Nemak also estimate lower sales amid soft industry trend. In contrast, Sigma expects 5% sales growth, supported by all regions. Similarly, Axtel estimate a 3% increase in revenue year-over-year, after adjusting for currency and discontinued operations.

Estimated ALFA EBITDA of $2 billion in 2020 includes a $107 million extraordinary gain from Axtel data center sales to Equinix plus an estimated $30 million noncash gain from Alpek's business combination associated to its recent acquisition in the U.K. Adjusting for these extraordinary items, comparable EBITDA is expected to be $300 million lower in 2020 versus 2019. Approximately 2/3 of this difference is due to Alpek based on a lower reference margin outlook for polyester and polypropylene as well as $40 million EBITDA contribution from its Cogen operations in 2019, which were sold.

Sigma and Nemak make up the rest of the difference. Sigma is anticipating increased pressure on pork and raw material prices, particularly in Europe while Nemak expects soft industry conditions to extend into 2020. All businesses are actively engaging in operating efficiency initiatives to mitigate the impact of these external headwinds.

Consolidated CapEx is expected to remain above $900 million in 2020 as lower CapEx in Nemak should be offset by higher CapEx in Axtel and Alpek. These funds will support investments in improving efficiencies, in proportioning to high-growth businesses and expansion, all of which should boost our business demonstrated EBITDA and cash generation in the upcycle.

Alpek will focus on enhancing its recycling capabilities and integrating its recent acquisition. Sigma will continue to exploit its innovation capabilities to their fullest potential as well as executing operating efficiency initiatives to improve profitability, particularly in Europe. Nemak will continue capitalizing on the trend towards a more sustainable mobility to its structural and electric vehicle component capability, whereas Axtel will be operating under a new structure that is expected to strengthen its leadership position in key business segments to unlock its -- this value potential.

This concludes my remarks. We will now take your questions. Please, Hernan.

[Hernan Lozano, executive]

We would like to begin the Q&A session with questions on ALFA. Eduardo and I, will take questions on ALFA or corporate matters. Operator, please instruct the participants to queue for questions on ALFA.

[Operator]

[Operator Instructions] Our first question comes from the line of Vanessa Quiroga of Crédit Suisse.

[Vanessa Quiroga, analyst]

Regarding at the corporate level for ALFA, given the successful divestments and receiving proceeds as expected, what can we expect regarding your balance sheet strategy at the corporate level, should we expect a pay down of debt just a reduction of net debt, higher dividend distribution? Anything that you can tell us in that regard.

[Eduardo Alberto Castillo, executive]

Sure. Thank you for your question. The divestments, as you know, we're at the subsidiary level, both in Axtel and Alpek and each one of the company has its own strategy of reducing debt and paying dividends. Axtel has received from divestments over $500 million, which have been mainly used to reduce debt. And in the case of Alpek, Alpek also did a significant debt repayment using the proceeds from the cogeneration sale, and they also paid an extraordinary dividend of $140 million earlier this year.

In the case of ALFA, we did receive the extraordinary dividend from Alpek in the portion that corresponds to ALFA's majority shareholder and that was used to pay some short-term debt and will also be used to pay the dividends that are expected to be decided during our next shareholders' assembly that will take place at the end of February.

In addition to that, it was discussed today earlier during Axtel's call and also in my previous remarks, the infrastructure project for Axtel. And also, that will be an initiative that will be focused on reducing debt at Axtel and on a consolidated level at ALFA is looking -- as we have discussed before, we are looking to strengthen our balance sheet primarily, and that is the first priority.

[Vanessa Quiroga, analyst]

Okay. And regarding dividend, should we expect any -- any significant change? Or should we expect relatively flattish ordinary dividend distribution from ALFA?

[Eduardo Alberto Castillo, executive]

The dividends will be proposed in the shareholder meeting at the end of February, as I mentioned. And I think we can expect to be consistent with their past track record, we do not have a figure to share with you at this time.

[Vanessa Quiroga, analyst]

Okay. Okay. Excellent. And regarding Newpek, is this that correct section for Newpek questions or...

[Hernan Lozano, executive]

Can we hold on a little bit to that question. Vanessa, please?

[Vanessa Quiroga, analyst]

Yes, no problem. Okay.

[Hernan Lozano, executive]

We'll cover a Newpek in a later section of the call. I appreciate that.

[Operator]

Our next question comes from the line of Fernando Bolanos of Monex.

[Fernando Bolanos S., analyst]

Your stock right now is in the lowest price since 2011, as you already mentioned. And I would like to know what is your plan to create value to the shareholders? In your reports, we cannot see a focus on profitability measures like ROI or ROIC. They seem weak in recent years and not only for ALFA.

[Eduardo Alberto Castillo, executive]

Thank you, Fernando, and thank you for the opportunity of addressing this issue. Certainly, ALFA is trading at a very large discount. First, let me assure you that, that is a top priority for our Board and the management of the company. We think the current discount is unreasonable when you consider the strong business fundamentals and solid operating cash flow generation from our businesses. Our businesses, as you know, have a leading-industry positions globally. We have 70% of our sales outside of Mexico. So we have limited exposure to each one of the countries. And we also have a very strong internal corporate governance. We have shared with you before, 85% of our independent -- of our Board members are independent. So we feel really those business fundamentals, again, are not reflected in the prices.

And regarding cash flow generation, as I mentioned before, ALFA has paid dollar-denominated dividends growing at a 16% compounded annual growth rate in dollar terms over the last 10 years. And if you look at some of the metrics that we just mentioned, let me take this opportunity to mention a couple of them. The free cash flow of the company, when you consider the normal CapEx every year, taking out the strategic CapEx, for the last 5 years, this -- it has been larger than $1.1 billion each year. Again, I think that's a solid proof of the cash flow generation capabilities that we have in our businesses.

If you look at the free cash flow yield, calculated as free cash flow divided by market cap, for last year 2019, it was higher than 20%. Again, I think that's a very, very solid argument. You mentioned a return on invested capital. We continue focusing on the noncore asset divestments across all our businesses in order to strengthen our balance sheet and maximize the ROIC we have.

And let me, again, give you a couple of figures. The average ROIC for ALFA, the last 2 years, 2018 and 2019 has been the average above our WACC. So we are, in our opinion, not only having solid results, but we are creating value.

And if you look at how we have managed the financial discipline of the company the last few years, we plan to continue doing so. The #1 priority is to achieve a stable net leverage ratio between 2.5%, which we have discussed before as our target prior to exercising a more aggressive share buyback program.

Again, let me take this opportunity to mention again that we will continue and always focus on deliver benefit to our shareholders and let me mention again the figure that I previously commented on. ALFA delivered a total benefit to our shareholders of $404 million last year, when you do add the $202 million record dividend, the $37 million share buyback and the $165 million canceled shares that we did last year. And again, that represents more than 10% of ALFA's current market cap. So those are some of the financial metrics that I would like to share, we can certainly discuss any other ones that you wish later on.

[Fernando Bolanos S., analyst]

Sorry, but I would like to challenge a little bit this idea of ROIC above WACC in the last 2 years because exactly these 2 years maybe are not sustainable levels. It has effect -- about $500 million of extraordinary effects that benefit the WACC, the ROIC, excuse me. And I believe the question is in the long-term run if you can maintain these levels of profitability? And maybe if you can incorporate these measures in your reports, so we can have the track record about your ability to create value to the shareholders?

[Eduardo Alberto Castillo, executive]

Sure, sure. Will be our pleasure to share the metrics with you.

[Operator]

The next question comes from the line of Rodolfo Ramos of Bradesco BBI.

[Rodolfo Ramos, analyst]

Just one question on Sigma, but related to the corporate side. I mean, one of the key catalysts for ALFA has been for several years now the potential listing of Sigma and with the more challenging outlook in 2020 this year at Sigma, mainly to the African swine fever pressure in cost, perhaps longer than expected. I mean, how do you think about the timing of this event that could help ALFA investors realize some of these locked or hidden value?

[Eduardo Alberto Castillo, executive]

Thank you, Rodolfo. Thank you for the question. We continue having as one of the objectives of the company to take Sigma public. Certainly, as you mentioned, this is not the right time to do so. The industry as a whole is facing a significant challenge with ASF, particularly, in Europe. And also, we don't think the equity market environment today is appropriate to think about it. But certainly, that's something that we'll continue looking at in the future at the appropriate time.

[Operator]

There are no further questions at this time on ALFA. I would like to now turn the call back over to Hernan.

[Hernan Lozano, executive]

We will then take questions on Sigma. Roberto Olivares, Sigma's CFO, will answer your questions. Operator, please prompt for questions on Sigma.

[Operator]

[Operator Instructions] Our first question comes from the line of Alejandra Obregon of Morgan Stanley.

[Alejandra Obregon, analyst]

So I have a very simple question on your EBITDA guidance for Sigma. Just -- I was just trying to understand it on a regional basis, it seems that I have to assume significant tailwinds in either U.S. and Mexico to get there. So if you could just provide some color there, that would be very helpful.

[Roberto Olivares, executive]

Alejandra, thank you for your question. Regarding the 2020 guidance consider as Eduardo mentioned, a significant increase in raw material prices when compared to last year, mainly in Europe due to the ASF situation. For our guidance, we forecasted between a 15% and a 30% increase in raw materials [ tariffs ] versus last year, as we still see some pressure on prices throughout this year in China.

As we have been doing so far, one way to mitigate the pressure in margins is by increasing prices. In Europe, we started by the end of October and the beginning of November to implement the second wave of price increases. And in order to mitigate the cost increase in this region. Since in this region, most of our clients are on the modern trade channel, it takes longer to negotiate with retailers. So for our guidance, we consider an impact coming from the lag between the cost increase and the implementation of our new [ pipeline ]. Obviously, we have been working on producing this time and maintaining a close relations with the retailers in order to be able to do it at this time.

This guidance consider what is our best estimate with the information that we have up to this moment, but there's still a lot of volatility in the market. For example, in the past recent weeks, we have seen pork prices decreasing both in Europe and the Americas, probably due to the coronavirus crisis that is happening in China that has been reducing the commercial activity in the region. This obviously has reduced the imports of pork from China, lowering the global demand. However, we expect, once the virus is controlled, to prices increase again. But as of today, we saw raw material prices below what we forecasted for the year.

[Alejandra Obregon, analyst]

Understood. Just a little follow-up there. What are you thinking and what are you seeing in Mexico? Is it because -- I mean, last year, 2019, Mexico did incredible pricing pass-through and that kind of helped offset Europe. Is it a possibility that you're thinking that for 2020, that might not be the case? Because from the numbers that you are providing, it looks like you're thinking of lower margins, at least in the U.S. and Mexico for sure.

[Roberto Olivares, executive]

I think in the case of Mexico and the U.S., we believe that margins will be sustained for 2020. As we mentioned, most of the [ income ] comes from Europe. In the case of Mexico, in particular, we see a volume growing a little bit with the economy. And we have, again, as Eduardo mentioned, we have a lot of innovation in the pipeline that hopefully will get us more volume. We see prices increasing to maintain marginal contributions per kilo. That is our intention, and we expect to do so in the regions, and most of the impact comes, again, from the lag between when cost increase and the capacity to implement those price increases, corresponding price increases.

[Alejandra Obregon, analyst]

Got you. And if -- just a follow-up question, if I may. What were the trends that consumers showed during 2019? Did you see any kind of substitution from one kind of protein into another because of price increases? What happened?

[Roberto Olivares, executive]

Sure, Alejandra. So regarding product decisions in our categories, we didn't see much of substitution. In case of pork, we definitely have portfolio to that because of prices where volumes were not as expected. But on the other side then turkey also for some time, increased a little bit. So we were moving from pork to turkey, we have the capability to -- in some of our products to substitute pork with turkey. And in that sense, we were able to at least sustain our volume with that.

[Operator]

There are no further questions at this time on Sigma. I would now like to turn the call back over to Hernan.

[Hernan Lozano, executive]

We will move forward and take questions on Newpek. Rodolfo Gamboa, Senior Vice President of Oil and Gas, will answer your questions. Operator, please prompt for questions on Newpek.

[Operator]

[Operator Instructions] Our first question comes from the line of Rodolfo Ramos of Bradesco BBI.

[Rodolfo Ramos, analyst]

My question goes around the opportunities that you're seeing here in Mexico. I mean, it's clear that you want to divest the U.S. exposure that you have on the energy side, right? That you're monitoring the developments here in Mexico. So what are some of the opportunities that you're seeing, particularly around this announcement that is expected at the end of this month on around energy projects? And if you can perhaps share any discussions or -- that you've had, if any, with the government?

[Rodolfo Gamboa, executive]

Yes, thank you Rodolfo. Thank you for your question. We are currently, as Eduardo described, focused on mainly exiting the businesses outside of Mexico. And in Mexico, what we're doing is really operating and operating as efficiently as possible. The 2 main projects that we have, which is the blocks in Veracruz, which we have -- [indiscernible] contracts for with PEMEX. And implementing or executing the minimum work obligations in the blocks, in the Tamaulipas area.

[Eduardo Alberto Castillo, executive]

Let me add -- this is Eduardo. Let me add a couple of comments. As we have mentioned before, the strategy that we are following for Newpek is to divest all the assets we have outside of Mexico and as I described previously, we plan to continue doing so as soon as possible. And for the time being, we plan to maintain, as Rodolfo just mentioned, the assets in Mexico, with the lowest possible investment and see what happens in the future with the industry. Regarding the expected announcements from the government, we really have no comment in the sense that we will wait to have more clarity and see the details of the new rules, in order to make a decision.

[Operator]

There are no further questions at this time on Newpek. I would like to now turn the call back over to Hernan.

[Hernan Lozano, executive]

Let's move on with questions on Alpek, Nemak or Axtel. These companies held their earnings conference call earlier this morning. Jose Carlos Pons, Alpek's CFO; Alberto Sada, Nemak's CFO, and Adrian de los Santos, Axtel's CFO are all here with us to answer any additional questions. Operator, please instruct the participants to queue for questions on Alpek, Nemak or Axtel.

[Operator]

[Operator Instructions] There are no further questions at this time. I would like to now turn the call back over to Hernan.

[Hernan Lozano, executive]

Well, I would just like to thank everyone for their interest in ALFA. And if you have any additional questions, please feel free to reach out to us. We would be pleased to assist you. Thank you very much for joining us today, and have a nice day.

[Operator]

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.