Alpek SAB de CV

BMV:ALPEKA

Earnings Call Transcript 2019-Q3

[Operator]

Good morning, everyone, and welcome to Alpek's Third Quarter 2019 Earnings Conference Call. With us this morning, we have Alpek's José Carlos Pons, CFO; and Alejandro Elizondo, IRO, who will discuss the company's performance and answer any questions that you might have.

As a reminder, today's conference is being recorded and will be available on the company's website at www.alpek.com.

I will now hand the call over to Mr. Elizondo. Please go ahead, sir.

[Alejandro Elizondo, executive]

Thank you, operator. Good morning, and welcome. We very much appreciate everyone's participation today. This call will be divided into 2 parts. First, José Carlos Pons, our CFO, and I will provide a general overview of Alpek's third quarter 2019 performance and an update on relevant events. Afterwards, we will have a Q&A session.

Before we get started, let me remind everyone that the information discussed in today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions not to rely unduly on these forward-looking statements. Alpek undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

I will now hand the call over to José Carlos.

[José Pons, executive]

Thank you, Alejandro. Good morning, everyone, and thank you for joining us today.

Third quarter '19 marks Alpek's second consecutive quarter of EBITDA improvement and its highest EBITDA quarter of the year so far. The Polyester segment showed a marked improvement versus second quarter '19, while the Plastics & Chemicals segment continued posting better-than-expected results. The results occurred even as crude oil price dropped back to first quarter '19 level throughout the third quarter, mainly because of renewed trade war tensions between the U.S. and China. Consequently, paraxylene price also contracted, albeit at a lower rate than during the previous quarter to its lowest level since third quarter '17.

Polyester segment results were favored by a slight increase in volume, reference margins which were above guidance and an improvement to margins resulting from a smaller raw material carryforward effect.

Although Alpek still faced a negative inventory loss and raw material carryforward effect, the impact was far smaller than second quarter '19 and first quarter '19. It is important to note that Px prices appear to have stabilized at this lower level. If the trend continues, both inventory losses and raw material carryforward effect would not repeat in fourth quarter '19.

The Plastics & Chemicals segment continued to exceed expectations in third quarter '19, driven mainly by strong results from the polypropylene segment. Reference PP margins have remained at steady level since second quarter '18 and above guidance. These results were slightly offset by Caprolactam result, as reference margins declined this quarter.

Moving on to development during third quarter '19, Alpek announced it had met all regulatory requirements needed to officially start operations at the Altamira cogeneration facility, which has been running at capacity for more than a month. We'll continue working towards closing the sale before year-end.

Alpek also made progress on improving its debt profile by successfully issuing a 10-year $500 million bond in September. The bond achieved the lowest spread in Alpek's history, was 6x oversubscribed and significantly extended average debt maturity.

Lastly, Alpek joined The Recycling Partnership, a non-profit organization focused on improving recycling efforts in the United States via curbside collection and awareness programs. Through our work with The Recycling Partnership as well as our acquisitions in the recycled PET margin -- market, Alpek continues to show its unwavering commitment in leading the effort towards a circular economy for PET.

Alpek's year-to-date results are reflective of strong operational performance over the last 3 quarters. If excluding inventory losses and raw material carryforward effects, comparable EBITDA would be $615 million, exceeding our 2019 guidance figures and representing only 1% less than 2018 year-to-date results, which were the highest in the company's history.

Based on these results as well as a lower expected raw material carryforward effect in 4Q '19, we maintain our guidance for 2019. Key factors towards meeting our projected financial results will continue to be the evolution of paraxylene prices, polyester margins and to a lesser degree Caprolactam margins.

At this point, I would like to turn the call over to Alejandro.

[Alejandro Elizondo, executive]

Thank you, José Carlos. Alpek's third quarter consolidated revenue was down 7% and 22% when compared to 2Q '19 and 3Q '18, respectively, driven mainly by lower feedstock price. Volume was flat quarter-on-quarter and down 5% year-on-year as sales of Caprolactam and low-margin commercialization of industrial chemicals affected volume, but not EBITDA. Average consolidated prices declined 7% quarter-on-quarter and 18% year-on-year, given the reduction to feedstock costs.

Third quarter consolidated EBITDA was $194 million, including a $16 million noncash inventory loss, $3 million net loss from nonrecurring items and negative raw material carryforward effect. Adjusting for the inventory loss and other items, comparable consolidated EBITDA was $213 million, up 13% versus last quarter and down 9% versus 3Q '18 due to lower feedstock prices and margins when compared on a year-on-year basis. Furthermore, when excluding raw material carryforward effects, comparable EBITDA would increase to $331 million in 3Q '19 and $615 million 2019 year-to-date. This is 7% higher versus 2Q '19 and only 1% lower versus historical 2018 year-to-date result.

With regards to Polyester results, Alpek benefited from a slight increase in volume and lower raw material carryforward effect. As such, comparable Polyester EBITDA was $144 million, up 17% versus 2Q '19. Comparable Plastics & Chemicals' EBITDA was $65 million, also up 4% versus 2Q '19, driven mainly by continued strength in polypropylene margin.

Alpek's third quarter profit attributable to the controlling interest totaled $50 million, compared to $56 million last quarter. This decrease is mainly related to higher financial costs.

Regarding our balance sheet, net debt was $2.04 billion, down 2% versus last quarter and up 27% year-on-year. Debt decreased by $48 million during 3Q '19, mainly from stronger cash flow generation. Alpek also increased its average debt maturity, from 2.7 to 4.9 years, through its issuance of a new 10-year $500 million bond. Our net leverage ratio was 2.4x, up versus 2Q '19, given the lower last 12 months' EBITDA as 3Q '18 results, which were based on extraordinary polyester margin, were phased out of LTM calculation.

Our interest coverage was 7.8x. Alpek reaffirms its plans to pay an extraordinary $143 million dividend to shareholders once the proceeds from the sale of its cogeneration power plants are received. Alpek also plans to pay down short-term debt obligations, with the remaining proceeds from the sale. Alpek's CapEx was $49 million in 3Q '19. Most of these funds were used in finishing the Altamira power cogeneration plant, along with minor asset replacement.

This concludes my remarks for the moment. I would now like to open the call for questions. Operator, please instruct the participants on how to place their questions.

[Operator]

[Operator Instructions] Our first question comes from Vanessa Quiroga with Crédit Suisse.

[Vanessa Quiroga, analyst]

My question is regarding your strategy for the company, following the successful completion of the sale of the cogeneration assets. Where would you focus in terms of investment and growth or if you plan to continue focusing on balance sheet and efficiencies?

[José Pons, executive]

Thank you, Vanessa. Thank you for joining us in the call. This is José Carlos.

[Audio Gap]

about to complete, because of the sale of the cogeneration facilities, we will receive net proceeds -- total proceeds of $801 million, net proceeds of around about $700 million. What we plan to do with those $700 million is that we will pay as an extraordinary dividend, and the remainder we will use it to improve our balance sheet.

But you're right, we will be in a position to continue exploring opportunities to pursue our strategy. We're working on 3 different avenues towards our strategy. First one to improve our current scope, meaning, small improvements in productivity, labor efficiency deals, small expansions to our current facility so that we can reach a better scale. So that will be -- kind of in that bucket, we will be improving our current operations in terms of maintaining our competitiveness and cost. So as you know, we like to be in the best part of the cost curve and that will be the scope of those investments. So they will not be significant, but they will allow us to remain competitive.

Second area of investment, it's regarding potential growth opportunities. And in that bucket, we put, for example, vertical integration. We are looking at opportunities to integrate certain key feedstocks for ourselves. One of those would be Px. And we are advancing in selecting on a strategy -- in defining a strategy of where to go. I think we will be even more progressed than what I'm just indicating. And we are also looking at opportunities in other regions. There may be opportunities, not clearly in Asia, but in other markets where we could increase our presence in the PP market.

And in addition and the final parts of our strategy is related to recycling on the circular economy front. As you know, we have been investing and making a couple of acquisitions -- one acquisition this year. We are thinking on expanding that facility that we acquired this year. We're also evaluating other opportunities in the continent. There may be opportunities in South America, as we speak, Mexico and clearly in the U.S. So that's an area where we would like to continue to investing in time and effort to improve our position in the recycling business. So that's a broad summary where we would like to focus our next steps, and that will be the task for 2020.

[Vanessa Quiroga, analyst]

Okay. Okay, great. Just a follow-up there, José Carlos, when you say it increased presence in the PET market, do you refer to Americas? Or would you go outside the continent?

[José Pons, executive]

No. We're thinking outside of the continent. It's just an exploratory thought at this moment.

[Vanessa Quiroga, analyst]

Okay, okay. And do you expect the Polyester spreads to remain supportive of growth in investment?

[José Pons, executive]

At this moment, yes. As you know, we have been favored this year with good margins for our business. We are seeing typical seasonality adjustments in the fourth quarter. But yes, we're filling -- we're seeing the balance of capacity utilization and discipline from our -- from the industry in terms of increasing capacity much better than it used to be.

[Operator]

Our next question comes from Nikolaj Lippmann with Morgan Stanley.

[Nikolaj Lippmann, analyst]

Congratulations on the strong numbers. I have basically 2 questions. First, on the volumes that could appear to be a little bit on the weak side. Could you provide any color on what you're seeing in terms of North American sort of like-for-like volumes? And also, what you assess to be the impact of some of the sustainability concerns that we're currently seeing in several developed markets? So that's question number one. And question number two, what's the status of -- state of the Corpus CapEx and start of operation?

[José Pons, executive]

Thank you, Nikolaj, for joining us in the call. Answering the first question related to volumes. When we compared third quarter to second quarter '19, we're basically flat in our volumes. Yes, we're seeing some reduction when we compare to third quarter '18. I would just like to highlight that, that was a tough comparison because margins and volumes were very high in that quarter. So all in all, we're feeling more or less stable volumes throughout the year. We have seen some effects in our Plastics & Chemicals divisions. We have decided to stop commercializing certain low-margin, low-volume applications from the Specialty Chemicals business, mainly from M&G and some other chemicals. And that has affected our volumes, but there were low margins and they were not really affecting the overall profitability of the company. Also, on the Caprolactam business, we have reduced our volumes due to the limited availability of ammonia in the country.

[Nikolaj Lippmann, analyst]

When you say flat -- I'm sorry for following up. When you say flat volumes, are you thinking -- are we looking at a like-for-like and I think that was a reference to Polyester, are you looking at a like-for-like comparison there?

[José Pons, executive]

Yes, very similar. What we're seeing -- and probably your question is regarding Brazil. We're seeing flat volumes in Brazil in -- so far, comparing it on apples-to-apples basis. And when you take out the Brazilian effect, we're also seeing flat volumes across the Polyester business.

[Nikolaj Lippmann, analyst]

Okay. And what is the status on the North American -- sorry, on the Corpus Christi expansion in terms of both CapEx and start of operations?

[José Pons, executive]

Sure. Thank you. As we have been sharing with all of our investors, we have been working with the engineering firm to develop the final budget for the facility. We have already had certain preliminary feedback from the engineering firm. It seems that it will be in line to what we expected, probably with small deviation. And timing-wise, so we're still forecasting to have end of '21 the PET line and end of '22 the PTA line. That's more or less where we are. So we are in line and we're continuing to monitor that project very closely.

[Operator]

Our next question comes from Julia Park with UBS.

[Julia Park, analyst]

I have 2 questions here. The first one is on PET volume. In the last conference call, you mentioned that the lower volumes were due to the high level of imports. I would like to know if imports are still higher on a year-over-year basis. And how would you balance the price versus market strategy, so that the company doesn't keep on moving market share to importers?

And the second question is on capital allocation. You reiterated that following the cogeneration sales, the company would distribute extraordinary dividends and would also have a more flexible balance sheet that would allow you to look at new M&A opportunities. However, despite improvement in the net debt, the leverage ratio is still significantly up on a year-over-year basis. And taking into account those factors, how can we see the capital allocation going forward? You mentioned it previously, but what would be the priority, M&A opportunities or deleveraging? And if I may, just one quick follow-up on Brazilian operation, how do you see it going forward in the fourth quarter?

[José Pons, executive]

Thank you and thank you for your question. Well, first, let me answer the cogen sale, the capital allocation question, and then I'll come back to your other question regarding volumes. As you know, we're about to complete the sale of the cogeneration assets. We plan to distribute an extraordinary dividend of $143 million. The remainder of the net proceeds we will use to improve our balance sheet. And that will take us to around about 1.6, 1.7x net leverage ratio. So we believe we will be in a very comfortable situation.

Today, our net debt-to-EBITDA is at 2.4x. The reason as we shared in the initial conversation that we provided is that we took a high [ outsales ] EBITDA from our LTM and that automatically increased our net debt ratio. However, when you take a look at the absolute number of debt, we have reduced it throughout the year. Cash flow from operations has been positive, and we continue to work on reducing. You also need to consider that we included since the start of this year the IFRS effect, which artificially or just by a sudden increased our leverage ratio. However, we feel comfortable at 2.4x. We believe that the commitment that we have in CapEx, that we had a question on Corpus and what we have in front of us, we can clearly work around those with the current state that we have. We will be in a very interesting position once we make the sale of the cogeneration asset.

Capital allocation, I think I will come back to the answer that I gave to Vanessa, that we will work around those 3 areas of the strategy in terms of recycling, growth opportunities and improving our current operations. I don't know if that answers that question. That's more or less what I would like to share for that.

[Julia Park, analyst]

Yes, sure.

[José Pons, executive]

Okay. Regarding Brazilian operations, we have been very pleased with the performance of this facility. We're very pleased with the people that we inherited from this operation. They have been extraordinary in turning around the operation and improving the performance. We believe they're taking this facility to a world-class operation. Volumes so far have been flat, but they are flat in a good level. And I think all in all, we're very pleased with this acquisition and the contribution that it has had to our operations. Going forward, we're seeing more or less stability to what we have seen from the last quarters and the last year.

And regarding PET volumes, that was, I believe, your last question -- your first question, but it's the last question. It's regarding to imports. Yes, we have seen some imports, specialty, maybe on Mexico related to the current situation of M&G. M&G has some trouble in picking up the volume that it lost because of the situation that it had back in '17 and '18. We're supporting, and it seems that it's going to the right direction. We feel that it will normalize by 2020.

[Operator]

The next question is from Vicente Falanga.

[Vicente Falanga Neto, analyst]

My first question, you point out in your presentation that Asia PET spreads, they have averaged $260 per ton in September. Just wondering, is there some nonrecurring impact here due to the attacks to Saudi infra which maybe caused the hike in MEG? Or this level below $300 per ton is something that we should expect for the fourth quarter or maybe even looking forward?

And then my second question, to what does Alpek attribute pure PET resin prices following the lower recycled resins? Do you expect this to continue to be the case looking forward? And does this impact your expansion plan and recycled PET somehow?

[José Pons, executive]

Regarding the contraction of Asia PET margins, remember that this summer, the second quarter and third quarter, typically, we experience higher volumes and higher margins. So in terms of the reduction that we're seeing for the fourth quarter, it's a typical seasonality that we experience in this business. We are not envisioning any bigger reduction going forward. And at this moment, we're comfortable with the level that we're experiencing in the market. So that's more or less what we would like to comment on that.

Comment on recycling vis-à-vis virgin. Well, at this moment, the market is growing -- or some of the brand owners are asking us to increase our presence in the recycling front. They are buying every single ton that we produce out of our operations. So we're experiencing good profitability and good demand and volume from that business. I think that there's a true incentive for us to continue investing there. However, we believe that there will be a balancing due to the availability of material to be recycled. We don't expect that it will have a significant shareholder market in the next 5 to 10 years. There will be -- and that's the reason that we joined the recycling partnership. We want to increase the collection of materials, so that we can increase the recycling offer that we provide to our customers.

[Vicente Falanga Neto, analyst]

Just a follow-up. In terms of prices, I mean, do you expect recycled PET prices to keep trading at a discount to virgin?

[José Pons, executive]

Well, at this moment, they are not trading at a discount. They're even trading at a premium.

[Vicente Falanga Neto, analyst]

Okay. So okay. So this is something -- we had read a couple of weeks ago that they were, so they're probably back. Okay.

[Operator]

Our next question comes from Liliana De Leon with GBM.

[Liliana de Leon Meza, analyst]

My question is for the Plastics & Chemicals segment. Maybe you could give your view or your opinion, what we should expect regarding margins, if we consider that next year will be a lot of oversupply in propylene market? So we should expect an impact on prices or maybe in margin?

[José Pons, executive]

Okay. Let me just repeat the question to see if I understood correctly. It's regarding the Plastics & Chemicals, specifically on the polypropylene business regarding our expectation for volumes going forward. Is that the question?

[Liliana de Leon Meza, analyst]

The question is related with Plastics & Chemicals, what is -- because I think that the industry will have an important oversupply in propylene market. The market, especially in North America, is expecting capacity addition. So I don't know if you have some update on prices or margins.

[José Pons, executive]

Okay, perfect. Thank you. Yes, we're expecting that there will be some increasing capacity and some start-up of certain operations in the North American market, that will happen very likely more closer to 2021. It's not something that we're envisioning that will happen in 2020. So at the moment, we're not thinking that we'll have an important effect on our margins in 2020. Of course, we will monitor that and track that for 2021. After that, I think the market is also hungry for our polypropylene that we're supplying. So we believe that there are good dynamics in terms of volumes for ourselves.

[Operator]

Our next question comes from Alejandro Chavelas with Crédit Suisse.

[Alejandro Chavelas, analyst]

Congratulations on the results. Just 2 questions. First, on the issue of ammonia availability that you've touched upon a couple of questions before. How do you see this improving in the coming quarters, particularly with the start-up of the demand pipeline and the talks about a possible Pemex swap which could improve availability for Pemex in its petrochemical complexes? And I'll ask my second question later.

[José Pons, executive]

Okay. Yes. Regarding ammonia, you're right, the availability of natural gas is relevant for the ammonia production. Let me first start, the relevance of the Caprolactam business for Alpek is small. It's close to 2% of our total volume, so it's really not the business where we have a significant exposure. And due to the fact that -- and unfortunately because it's a program we like. But unfortunately, there's not been a lot of ammonia in the last few months. Yes, we're hearing Pemex to start -- thinking of starting their operations to produce ammonia. We're very close to them and see what that could mean to our business. In the meantime, we have developed options to import ammonia and to start developing different routes so that we can start having a more reliable and competitive supply of ammonia.

[Alejandro Chavelas, analyst]

All right. Excellent. And the second question, your view on monoethylene glycol prices. So we have seen very low prices in the feedstock in recent quarters, which has obviously helped margins. Do you think we could expect a bounce back in this commodity? Or how should we think about this going forward, particularly for 2020 in MEG prices?

[Alejandro Elizondo, executive]

Yes, this is Alejandro. So in terms of MEG prices, as you were mentioning correctly, Alejandro, prices are low, that's due to the large overcapacity that's available in North America right now. I think we're still ways away from that coming up, something that could potentially impact is the start-up of new ethylene terminals to export ethylene out of the U.S. That could potentially lighten a little bit of the oversupply of ethylene that's currently abundant in the U.S., but I don't think that will be enough to drastically change the trends of what we're currently seeing in low ethylene and corresponding MEG price.

[Alejandro Chavelas, analyst]

And third one, just if I may, regarding the Altamira, M&G plant and the concurso mercantil, do you have any update on that front?

[Alejandro Elizondo, executive]

I think you just want the progress that -- unfortunately, there's not too much to tell you in terms of progress, but because the process is ongoing, everybody is doing what they need to do, we're finalizing the documents, understanding the business plan. There's been a lot of work between the creditors to really determine what are the next steps. And what I would think will be our position at this moment is that we'll continue to expect that in the first quarter of 2020, we will be -- the company will be emerging from the insolvency.

[Operator]

Our next question is from Andres Cardona with Citigroup.

[Andres Cardona, analyst]

I just have a very quick question. It's about the CapEx for Corpus Christi. You said the advisers are telling you it is coming in line. Just want to check if the figure is around $500 million. That is the figure I have on my notes, just want to check that.

[José Pons, executive]

Thank you. As I indicated in a previous question, we continue to work with the engineering firm to develop a firm budget for the conclusion of this project. There has been ongoing discussion between the shareholders, the partners of this venture. I don't think we're ready at this moment to share with you a specific number, but it's in line to what we have shared, probably a little bit higher, but not significantly higher. I would expect that we will end this year with a clear picture of the number.

[Operator]

Our next question comes from Gilberto Garcia with Barclays.

[Gilberto Garcia, analyst]

I have a follow-up on Polyester volumes in North America. You mentioned that part of the reduction had to do with market share losses related to M&G's issues. Do you have an estimate you can share of what the growth of total demand was in North America?

[José Pons, executive]

So let me just repeat the question to see if I understood you. You want to understand the development of demand in the North American market, is that correct?

[Gilberto Garcia, analyst]

So let me put another way. You -- if I'm understanding correctly, you're saying that the volume reduction had more to do with M&G plant with any potential reduction in overall demand related to sustainability or other issues?

[José Pons, executive]

Okay. Let me just start by sharing or just highlighting that the Polyester volume, comparing second quarter to third quarter, the volumes for third quarter are up 1%. So all in all, we're seeing Polyester volume a little bit up, let's say. When compared to the last year third quarter results, yes, we have a reduction of about 5% and that's related mainly to a very tough comparison. Volumes were very high last summer and last third quarter, and that's the reason that we have a tough comparison. So we -- what we see going forward is more or less stable volumes. Yes, we shared that there might be -- there was a small reduction of volumes in Mexico PET related to imports that we had due to the situation that M&G has. We are supporting M&G. And it seems that it's going now into the right direction, it's recovering volumes, and we expect that situation to normalize by 2020.

Regarding your question with sustainability and circular economy. At this moment, we're not seeing an effect in our volumes to the contrary. As I already indicated, they are more or less flat when we compare it quarter-to-quarter. And we're seeing to the contrary, this recycling as an opportunity. We're increasing our presence and our customers are very pleased with what we are developing there.

[Gilberto Garcia, analyst]

Just a clarification. You mentioned that volumes last year were -- was a tough comparison base. Are you talking overall or North America because in the press release last year, you mentioned that excluding Brazil, volume was down 3%. So I'm not sure I'm understanding the comparison correctly here.

[Alejandro Elizondo, executive]

So Gilberto, the point that we're trying to make is simply that when you compare demand on a year-on-year basis, 2018 was positively impacted by the extraordinarily high margins at the time. The reason for that is that there was a strong demand as well, and there were import issues with Asian product, too. So that generated what we would call an extraordinarily high demand. And therefore, when you compare that versus this year, you're not seeing that much of a change and you're actually even seeing a decrease year-on-year. However, if you want to break it down a little bit, in terms of Brazil, on a year-to-date basis, we obviously have improved the amount of volume that's coming out of Brazil. And in terms of North America, the results that we're seeing quarter-on-quarter remained flat. There's obviously an opportunity into the next quarter to improve on what was Carlos was mentioning, which is the weaker-than-expected demand from the M&G Mexico situation. And that is because during the fourth quarter is when you usually renegotiate contract volume. So when that happens, we'll be in a better position to be able to positively impact results for the next year.

[José Pons, executive]

Yes. And maybe just -- what I would like to share is that Brazil volumes have been more or less a constant.

[Operator]

Our next question comes from Jean Bruny with BBVA.

[Jean Baptiste Bruny, analyst]

Thanks also for the presentation you published. I think it's a big help to analyze the evolution of margins. Basically, all my questions have been answered, but if you can -- now being the time now of doing the forecast and budgeting for next year. Maybe what's your feeling for next year? Or do you see it? And maybe what are the biggest headwind for you guys?

[José Pons, executive]

Jean, thank you. And I like that you liked the presentation, it's our intent to provide you with more information, more transparency or even clear numbers in front of you. So any feedback, please provide it to Alejandro, to myself, and we're trying to improve there. Regarding the feeling for next year, we're at the moment of preparing budget, difficult for us to comment. So it's really -- hopefully, we can answer this question early next year. Not in a position to give you a clear indication. We're not seeing dramatic changes, that's what I can comment.

[Alejandro Elizondo, executive]

And maybe just to complement José Carlos' point, the one thing that will be different is, since we're seeing low raw material prices, the negative effects that we saw this year from raw material carryforward and inventory losses, we're likely expecting those to be lower or even potentially positive next year. So that's always going to be a boon to result. Yes.

[Operator]

[Operator Instructions] Our next question comes from Andres Cardona with Citigroup.

[Andres Cardona, analyst]

Can you remind us how much money have you disbursed to M&G from the credit line you have approved to them?

[José Pons, executive]

Yes. The total investment and its exposure that we have is $160 million.

[Alejandro Elizondo, executive]

And just to clarify for the rest of the listeners, that's for M&G Mexico's facility specifically. The first and second lien that were offered to them to continue operating or help them to continue operations and continue providing PTA to them. An investor-guaranteed credit line, so we don't have any exposure to the concurso mercantil. Thank you.

[Operator]

With no questions in queue, I'd like to turn the conference back over to Mr. Elizondo for any additional or closing remarks.

[Alejandro Elizondo, executive]

Thank you, operator. I would just like to thank everyone for participating in today's call. Please feel free to contact us if you have any follow-up questions or comments.

[Operator]

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.