Alpek SAB de CV

BMV:ALPEKA

Earnings Call Transcript 2022-Q3

[Antón Fernandez, executive]

Good morning, and welcome to ALPEK's Third Quarter 2022 Earnings Webcast. I am Antón Fernandez, ALPEK IR. And today I'm happy to rejoin by our CEO, Pepe Valdez; and our CFO, José Carlos Pons.

This presentation is divided into 2 parts. First, Pepe and José Carlos will comment on ALPEK's third quarter performance, recent events and our outlook for the remaining months of the year. Afterwards, we will move on to Q&A.

Please note that the information discussed today may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to certain risks and uncertainties. Actual results may differ materially, and the company cautions the market not to rely unduly on these forward-looking statements. ALPEK undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

I'd like to remind everyone that today's webcast is being recorded and will be available on our website at alpek.com. I will now turn the call over to Pepe.

[Jose de Jesus Valdez Simancas, executive]

Thank you, Antón. Good morning, everyone, and thank you for joining us today. I am very pleased to mention that in these last few months, ALPEK had yet another successful quarter. Third quarter '22 was the first quarter in which with the new PET Sheet and Resin business located in Oman was fully consolidated, and we are very pleased with the seamless transition thus far. We have already seen synergies between this and our existing business, and we look forward to continuing to integrate best practices towards the future.

From a financial perspective, this new business has experienced strong results, leading ALPEK towards the highest quarterly comparable EBITDA in its history. Let's start off by reviewing the main topics we will cover today.

First, our financial performance was slightly above our expectations for the third quarter, which José Carlos will review in greater detail later in this presentation. And then we will discuss ALPEK's progress towards product circularity and outlook for the rest of the year. Let me provide some context for the results.

The quarter was marked by a tighter economic environment and elevated energy prices, which primarily affected conversion cost in the United States, Mexico and United Kingdom. At the same time, Asian integrated polyester reference margin averaged $400 per ton for the quarter, higher than expected and only 2% lower than in the previous quarter with the spread between Chinese and Asian margins narrowing to $77 per ton. However, it's worth noting that reference margins have begun to normalize, reaching an average of $356 per ton in September.

Meanwhile, polypropylene reference margins declined to an average of $0.34 per pound, 13% lower quarter-on-quarter, mainly due to following: weakening demand towards the end of the quarter, leading to higher inventory levels in the industry; and second, an addition of polypropylene capacity that is coming in North America. Also, in North America, EPS average reference margins remained strong during the third quarter.

At this point, José Carlos will take over and delve into more detail regarding the specific impact these changes had on the financial results.

[José Pons, executive]

Thanks, Pepe, and thank you all for being here with us today. I would like to highlight some of OpEx main achievements during the quarter. Overall volume increased to 1.36 million tons. We reached the highest ever quarterly comparable EBITDA of $424 million with both the Polyester and Plastics & Chemical segments posting their best figures ever as well.

Leverage remained at 1.2x. Delving deeper into volume, ALPEK reached 1.36 million tons in this period, 8% higher than in the previous quarter, largely due to the recently incorporated PET Sheet and Resin business. In the Polyester segment, volume was 1.1 million tons, 10% higher quarter-on-quarter. In Plastics & Chemicals, volume was 2% lower quarter-on-quarter due to the fact that there was a slight decline in polypropylene demand and maintenance at one of our EPS facilities.

Moving on to raw material price dynamics. Average footprint crude oil price decreased to $99 per barrel, 12% lower than in the previous quarter, largely due to a tighter macroeconomic environment. U.S. reference paraxylene prices decreased by 18%, in line with crude oil.

In Plastics & Chemicals, propylene prices declined, averaging $0.47 per pound, a 23% decrease when compared to the second quarter.

Switching over to the EBITDA breakdown for the quarter, we can see that overall comparable EBITDA reached a new high of $424 million. This was 15% higher than in the previous quarter, primarily due to better-than-expected margins for PET and EPS and the newly incorporated volume from the PET business.

Meanwhile, reported EBITDA was $306 million, 40% lower quarter-on-quarter. These results included a noncash inventory loss of $70 million and the negative carryforward effect of $46 million.

If we look at results by key segments, Polyester comparable EBITDA reached $261 million, 20% higher quarter-on-quarter and 144% higher year-on-year, making this the strongest quarter ever for this segment. This was due to solid volume demand and the resiliency of the Asian polyester reference margins, which remained higher than expected, averaging $400 per ton, 26% higher year-on-year.

In Plastics & Chemicals, comparable EBITDA set a new quarterly record of $158 million, an 8% increase quarter-on-quarter and 28% year-on-year. This was mainly due to the improvement in EPS business.

With regards to free cash flow generation, net working capital investment increased by $111 million, yet at lower levels than the previous quarter, largely due to declining raw material prices during the quarter. CapEx totaled $93 million and was mainly allocated towards scheduling maintenance as well as a portion of CCP's construction. This all resulted in a negative free cash flow of $6 million.

Finally, OpEx net debt increased to $1.8 billion and last 12 months EBITDA increased to $1.54 billion, resulting in a leverage ratio of 1.2x net debt to EBITDA.

That concludes my comments. Thank you for your attention. I will now turn the call back to Pepe.

[Jose de Jesus Valdez Simancas, executive]

Thank you, José Carlos. Let us review some recent events. As per the press release distributed this past August, ALPEK announced that its Expandable Styrenics subsidiary joined Cyclyx International, a consortium-based company that focuses on establishing a secular pathway for plastic recycling. Through predictive algorithms and artificial intelligence, ALPEK gains access to custom feedstock batches from waste with the necessary chemical and physical properties to ensure their recyclability. Having more feedstock available will significantly support ALPEK's EPS projected recycling capacity to achieve its secularity target of increasing its recycling content in select products to at least 30% by 2030.

It is worth noting that ALPEK's EPS production is primarily consumed for long-term users, such as in the construction issue to external insulation properties which seek to reduce the carbon footprint for homes and buildings. However, for the short term -- or the products that have short-term usage, which represent approximately 35% of the sales volume, the company continues to establish its role as a leading recycler, similar with PET, now through growth in Expandable Styrenics recycling.

Finally, regarding the outlook for the remaining months of the year, the company expects continued normalization for PET as well as polypropylene and EPS margins. Volume for both segments is expected to remain relatively stable, only affected by the usual demand seasonality, which is characteristic during the fourth quarter. Additionally, for PET, we expect inventory reductions from some of our customers.

Meanwhile, ocean freight prices are expected to continue normalizing towards the end of the year. During the aforementioned as well as the incorporation of our new PET business and the results we have witnessed so far, ALPEK expects to be in line with its revised guidance figures.

As always, I would like to thank our team, our customers and our suppliers for supporting ALPEK in reaching new heights. I would also like to thank you, our audience, for your attention here today.

I will now turn the call back to Antón to open the webcast for Q&A.

[Antón Fernandez, executive]

[Operator Instructions] Our first question comes from Alejandro Zamacona from Credit Suisse.

[Alejandro Zamacona Urquiza, analyst]

Just a quick question regarding the bad contract negotiations. Amid the latest trends in freight rates and the recent slide [indiscernible] in PET margins for the quarter, what are you expecting for next year's negotiations? And if you can remind us the timing of these negotiations, it will be helpful.

[Jose de Jesus Valdez Simancas, executive]

I would say that currently, in some of the markets that we serve, the freight rates have an important impact or consideration. This is for us, mostly in, I guess, U.K. and in South America. Those are the regions where the freight rates have a more immediate impact in our prices.

But basically; however, we do have some formulas that take into account. So we don't probably have to change many things. But yes, the reduction in trade will have some impact in our margins in those regions at the end of the day.

In the case of North America, as you know, most of our business is contracted on the basis of cost plus. And that cost plus has nothing to do with freight rates from Asia. So in the case of North America, we are not expecting any major change as a result of these ocean freight rate reductions.

[Alejandro Zamacona Urquiza, analyst]

Okay. And then my second question, if I may. In terms of the dividends, can you share any color on the potential extraordinary dividend, timing, amount and the rationale behind this potential extraordinary dividend?

[Jose de Jesus Valdez Simancas, executive]

I think, Alejandro, what I can share is that the management will propose to the Board sort of an extraordinary dividend in the next Board meeting, which is next -- early next week. And of course, the Board will have the final decision at the end. But I would say, I think it should be an important dividend, and it will most likely be paid in November this year.

[Antón Fernandez, executive]

Our next questions come from Jacob King from Scotia. Our next questions come from Luiz Carvalho from UBS.

[Luiz Carvalho, analyst]

Congrats on the results. If I may have 3 questions here, Pepe, I would like to come back on the capital allocation, which is kind of a recurring question from our end. You have been able to generate a good amount of cash. Net leverage is somehow, you know pretty much under control. you were able to announce dividends recently but also perform some or one acquisition or some acquisitions, right? So just trying to understanding mid- to long-term part of the strategy on the capital allocation, that would be interesting.

The second question, if I may. You made some comments in the last slide, talking about the margins or the volumes that you were expecting for the remaining months of the year. But if you can share some thoughts on 2023 outlook, mainly with, I'd say, the Chinese demand and what you're seeing also from Europe with, let's say, the high natural gas prices? I know that your operations are more concentrated in Americas, but how this is impacting overall, I would say, demand/margins and volumes in the end of the day?

[Jose de Jesus Valdez Simancas, executive]

Okay. I would try to answer your question this way. Looking at volume first, we see volume for next year strong. I mean we see very stable. We see similar volume next year than what we are experiencing this year. We don't see a lot of change in that.

In terms of margins -- well, I think in terms of margins, we have been discussing over the last quarters that, yes, we do expect that there will be some margin normalization. I would say particularly in polypropylene and EPS businesses. We will see some margin normalization going forward. And based on the different demand/supply dynamics in the markets and also in some cases, particularly in the EPS business, also taking in consideration the reduction of the ocean freight rates.

Polypropylene prices do not really correlate with the ocean freights. But in EPS, ocean freights do have so impact. We see normalization in both of those businesses.

In PET, as I mentioned, we do see some margin reduction, particularly in South America and Europe as a result of the reduction of the reference margins of PET in Asia that I mentioned before. And also, in both cases also, there is going to be an impact on the ocean freight rates -- margins or freight rates, I'm sorry, from China or from Asia to these countries that are also coming down or becoming more normal.

So yes, I do expect -- so we do expect some margin normalization in those 2 businesses. In PET, I already mentioned, I think that North America, we see margins stable next year versus this year. And remind you that's our largest business in terms of volume. And that would probably the answer to your question.

In terms of capital allocation, we are assuming, let's say, for next year a continuation, I would say continuation of the Corpus Christi project. That will require investment. We are also -- I mean we are -- at this point in time, we're not considering any new M&A. But as you do know, a lot of times or most of the times, the M&A are not planned a long time in advance. It really depends on what opportunities come about.

So that's something -- it doesn't mean we will not do any M&A. It just means that at this point, we are not looking at any specifics. There might be a couple of ones that will come to fruition. But we're not, let's say, including in our budget any of those at this time.

And yes, in terms of dividends, we do hope that we will continue to pay an attractive dividend yield. I mean given that we do have a very strong balance sheet. And as long as we do have that, I think it will be more efficient -- it will be an efficient way of using our own capital.

And again, at the end of the day, you have to -- Luiz, you have to remember that we do have a balance sheet that has a lot of room for new investment. So even as we pay dividends and we continue with the existing projects, we do still have capability to continue to grow in new opportunities.

[Antón Fernandez, executive]

Our next questions come from Nikolaj Lippmann from Morgan Stanley.

[Nikolaj Lippmann, analyst]

Congratulations again on phenomenal numbers and to the team and your M&A track record. I just have 2 questions. One, if you could give us a little bit more of an update in terms of Corpus, how that's moving along, the kind of the base related to that and when you expect to be up and running, also maybe the CapEx number in an updated manner, 1, 2?

The second question I have is more broad in terms of what's delayed in terms of the potential for developing a recycled PET standard, like percentages? What is it that would be required for brand owners to call the product -- or you would call the product recycled? Is that something that you think the industry is pushing for because it could create barriers to entry from imports? Or is it something that you think has a lower point on the agenda? Again, congrats.

[Jose de Jesus Valdez Simancas, executive]

Okay. Nik, I think in terms of Corpus Christi, the project really started last August. So we've been there only a couple of months. Everything is looking fine. And the idea will be to finish construction at end of '24, start commercial operations beginning of '25. Those are the numbers we have. We have not changed those numbers for the last 3 months.

I'll be paying a visit to site next Monday. So perhaps if I have more information, we will be able to share with you. So far, the investment there is relatively small. And I don't know the exact number, but I think we're talking about $300 million -- in the $300 million range, our part of the investment. Perhaps a little bit more than that, $300 million, $330 million, but that's the number we have for our share of the project, okay?

And in terms of recycling a standard product, I don't think that we are yet at that point. I think there's a lot of flexibility from, I think, the brand owners and most of our customers in terms of recycled content. I think this -- all of them, they have a goal, let's say, medium-term goal. But it really -- at this moment, it really depends now in what region or what country you're talking about.

And I think the biggest concern of all of the participants in this recycling effort, I think the biggest concern we have now, I would say, is number one, the collection of used bottles. That's number one concern. And then a lot of work going on in different technologies. As you know, the mechanical recycling is pretty well established at this time. But there's also a lot of different routes for the advanced recycling or chemical recycling that are being -- you have many different companies working on those. So at this point, I don't think we have a standard.

Also is another way of producing or recycling, which is -- and this is pretty much open only for the PET producers, which is what we call the SPT, which is single pellet technology, which means that you can feed into our polymer -- existing polymer lines, recycled pellets up to a certain percentage. So you produce one pellet that has both virgin and recycled. That's another way of moving forward.

So there are many ways. And as I say, we're now with a lot of flexibility. Eventually, I think you're right, there's going to be a preferred way -- preferred method. But as I say, right now, I think the biggest issue is how do we increase the collection and not only increase in terms of volume and another very important issue is not only increasing volume but improving the quality of the fixed stock of the bottles because that has a lot of implications on the yields that you're going to have.

If the product quality is not very good, you're going to have yields in the range of 50% or a little bit higher. When you have group yields like deposit material, then you can move into much higher yield, 75%, 80%. So a lot of that is, as I say, still being -- well, it's very fluid at the moment. But there is a lot of effort from a lot of people in that field. I think we all take that very, very seriously.

[Antón Fernandez, executive]

Our next question comes from Andres Cardona from Citi.

[Andres Cardona, analyst]

I have 2 questions. The first is can you please help me to understand how much are you being able to capture as of today from the reliability premium and the transport cost, your margins? And if you expect to see -- to still see some of these, let's say, unusual premiums in your 2023 contracts?

And the second question has to do with working capital. It was surprising to me to see this negative flow given the fact that raw materials were declining. Can you please help me to understand what happened there, if there is something that is on typical things? And congratulations for the results.

[Jose de Jesus Valdez Simancas, executive]

No, thank you for your question, Andres. Let me start with the premium and the ocean freight margins. Well, certainly, as I mentioned, depending on which market we're talking about, let's say, the ocean freight, as I mentioned, normally in South America and in Europe, the ocean freight is important in determining our prices.

Also, it's not necessarily automatic. It's not that every shipment you're adjusting the price, but this is taking into consideration in the negotiation of the prices. So that's true.

And in terms of the premium, well, you are right. When you have a lot of supply issues, sometimes premium can be better than other cases. However, again, in our South American and European operations, I don't think we've been changing the premiums. I think mostly the impact has been coming from the ocean freight.

So yes, as the ocean freight comes down, we do believe that we are going to see some, as we call it, normalization of margins particularly in those markets.

With regards to your second question of working capital, I have to say you are right. When raw materials come down, well, obviously, working capital has to come down. The only issue, Andres, is that there is a lag in that process. It doesn't happen immediately.

So normally, I would say, it takes a couple of months for this reduction to materialize. And I do believe that we want to see an important net working capital reduction in the -- during fourth quarter this year.

[José Pons, executive]

If I may, Pepe, in September, we also saw -- we already saw an increase in working capital. So we're starting to see that effect.

[Jose de Jesus Valdez Simancas, executive]

Yes. We had a negative -- we had a recovery reduction of working capital in September, but we had a positive in the first -- in the other 2 months. And yes, we want to -- we should have -- we should see the impact more clearly in the fourth quarter.

[Antón Fernandez, executive]

Our next question comes from [ Barbara Kuchar ] from JPMorgan.

[Unknown Analyst]

Congratulations on the results. So all my questions have been answered, so I wanted to shift a little bit and maybe focus something else. I wanted to understand a little bit better in terms of your funding strategy for next year for the 2023 bonds. You have discussed already your capital allocation strategy, but just to understand what you're thinking in terms of refinancing options for that maturity. So that would be number one.

Then the second one is more specific on the debt collection from the M&G Mexico. Just to confirm if the funds have already been received. And so if you could point out where do we see that in the cash flow statement? If not, when do you plan to receive them? And also how much is left to receive from them?

[Jose de Jesus Valdez Simancas, executive]

I'm going to ask José Carlos to actually help me in answering both of your questions.

[José Pons, executive]

Thank you, Pepe. Barbara, thank you for your question. As you know, we have an outstanding bond -- well, first of all, we have an outstanding bond that will mature now in November of around $94 million remaining that we basically paid out of cash on hand. We've been fortunate enough to have sufficient cash with us. So we will pay that with cash. '23, we will be able to pay that -- well, we're thinking on our financing strategy that will allow us to have some time to refinance that with a long-term debt. We don't believe that the market is ready -- or is at attractive rates to issue a bond.

So we'll probably use some temporary financing, probably 2, 3-year loans that will allow us to kind of have an opportunistic approach towards refinancing the 2023 maturity and we already have those in place. So we're ready to bridge that maturity, and we'll do refinance with a more attractive rate later on.

Regarding our debt collection, yes, we did collect $22 million. You should see that in -- I mean in our maturities -- not on our maturity, in our balance sheet, it should be seen in debt to third parties -- debt from third parties. We have been able to recover the entire second lien that we had with M&G. So they also had fortunate to be good with margins. And the total collection that we have had so far from them is $108 million -- my correction, we had the $108 million are coming...

[Antón Fernandez, executive]

The next questions come from Leonardo Marcondes from Bank of America.

[Leonardo Marcondes, analyst]

We saw a huge hike in EPS margins this quarter, right? In your view, your EPS spreads increased more or less 90% quarter-over-quarter and that's why the PET business was able to post such strong results in spite of the drop in PP margins, right? So could you share what are your expectations on EPS spreads? I mean here, we do not expect those to remain as high as they were this quarter, but we are also not seeing them going back to the previous levels in 2023. So I would like to know if you guys agree with that. And if so, could you share with us what, in your view, has been driving, I would say, these higher EPS spreads in the short to midterm?

[Jose de Jesus Valdez Simancas, executive]

Well, I think in terms of the question for this last quarter, I think the fact is that what happened was prices of raw material fell faster than our sales prices. So we were able to increase the spread temporary. But you're right, these margins tend to normalize as time goes by. And we do believe that we're going to be able to improve the margins somewhat versus the previous -- or pre-pandemic levels going forward but certainly at a lower level than what we are experiencing today. So I don't know whether that sort of answers your question.

[Leonardo Marcondes, analyst]

Yes. I mean at least...

[Jose de Jesus Valdez Simancas, executive]

We cannot hear you.

[Antón Fernandez, executive]

Can you speak a little bit louder, Leonardo, please?

[Leonardo Marcondes, analyst]

Sure. Can you hear me better now?

[Jose de Jesus Valdez Simancas, executive]

Not really but -- not great but better.

[Leonardo Marcondes, analyst]

Okay. I can follow up later.

[Antón Fernandez, executive]

Our next question comes from [ Jean Baptiste ] from BBVA.

[Unknown Analyst]

Just 2 quick questions on my side. The first one on OCTAL. Can you give us some color on the contribution of OCTAL during the quarter in terms of EBITDA? And when you closed the acquisition, you also mentioned that you were seeing some opportunities to some synergies on the purchase side. If you can give some comments on this?

The second one is in terms of outlook. Thank you very much for sharing your view -- the very preliminary view for 2023. Just to make sure, you mentioned that the margins for PET will be stable year-on-year next year in 2023 from 2022 levels.

And the last one is, in the last call, Pepe, you mentioned that the bottom of the recycled EBITDA, you were seeing it around $1 billion. Can you just also confirm that number?

[Jose de Jesus Valdez Simancas, executive]

Well, relative to the contribution, as you know, we don't disclose specific numbers for the different business units. But I do hope, Jean, that it will be now for you to say that the OCTAL margins or the OCTAL results were very strong, actually, stronger than we have anticipated in our project book.

A lot of reasons for that. Among others, as you know, is the situation of the freight rates. OCTAL has a contract for some of its volume -- or an important portion of its volume. The ocean freight was contracted before the spikes. So they do have that advantage that eventually at some point next year, that's going to finish.

So yes, that has contributed somewhat to the very strong results. But as I said, it's certainly been better than we anticipated.

In terms of the synergies, I think the most important synergy for us, so far, has been the -- we are integrating all of the PET and commercial operation with our existing organization. So I think that's an important opportunity for both of us, for OCTAL and for ALPEK polyester. So that has been an important -- and in particular, we do -- I do believe that we will be able to better serve our customers.

And also, in fact, I think we were short on PET most of last year in North America. And I think the OCTAL opportunity of acquisition will allow us to -- as I say, to supply more or supply -- better supply to our existing customer. So that's probably the most important, I would say, synergy.

And going forward, there's going to be, I think, a lot of synergies. We mentioned before, they do have a very leading technologies to the production of sheet. That is also allow us to produce even at the same time sheet and resin. So I think we're going to be able to also take advantage of that technology in new projects that we have in our different regions. So that's the situation.

With respect to PET margin, and I do want to sort of be more specific about your question. What I did say about PET margins for 2023 is that we do expect North American margins being similar to last year, north American margins. But I did mention that in our U.K. and South American operations, those margins are going to be lower as a result of lower ocean freight rates and also lower margins in Asia.

So a big chunk of our business is going to be stable. So other part is not going to be perhaps similar to this year. It's going to be lower than this year, hopefully, still at a very -- at a healthy level. And yes, the bottom of recycle EBITDA, yes, we still believe that the $1 billion is a good number, but I mean you -- that's probably an estimate that can change, depending on so many factors. And hopefully, also, as we are investing in more projects, that number -- we should be doing better than that number as the Corpus Christi and some other projects that we have that we're working on stat.

[Antón Fernandez, executive]

Okay. We have one question from Jacob King from Scotia throughout the Q&A function. And the specific question is, last quarter, we were expecting second half to be $330 per metric ton for the Asian PET reference margin. As first half came in at $400 per metric ton, what part of the margin was different? And what deal do you have now hold for the fourth quarter?

[Jose de Jesus Valdez Simancas, executive]

Good question King. I think what happened was basically -- in fact, the margins in Asia get stronger for at least for the July-August period. But we did see, and I mentioned that in my presentation earlier that in September, the margins from Asia were already $356. So the average for the quarter was $400. But at the end of the quarter, it was $356. And again, I do believe the $330 is still a good number for the remaining of the year. That is still a good number. We do believe that. It's just -- there was just a delay in the expectation. I mean it could be $330, $320, $310. I mean that range, I think, is realistic.

[Antón Fernandez, executive]

We have another question through the Q&A function from Regina Carrillo from GBM. And the specific question is besides the decline in raw material prices, could you give us more color on the components of this quarter inventory adjustment and also in net working capital?

[Jose de Jesus Valdez Simancas, executive]

Well, look, inventory adjustment, mostly -- I mean it was a result of our 3 main raw materials coming down significantly in some cases. The propylene price, I think you saw the last number in September. The contract propylene price in the U.S. was $0.44 per pound and it is coming from a much higher number. I don't remember right now, memory, what was the price at the end of the second quarter, but it was significantly higher.

And in the case of styrene, the reduction was even bigger, I think, starting at some point was at the $0.80, $0.90 per pound range. And right now, it's around $0.50. So those 2 raw materials had a significant reduction in price during the last quarter.

And even paraxylene, paraxylene also had an important impact in price reduction. So I would say a big reduction in those 3 created these inventory adjustment. Going forward, again, propylene, believe it or not, is also -- we believe it's also going to come down in October. From the $0.44, it's going to -- we estimate it's going to be like in the $0.34 per pound, which is unusually or unsustainably low. So we're going to have, at least in October, another reduction. It may last November, December, I don't really know, but it's going to be there.

And in case of styrene, we see that price more stable at around $0.50 per pound. I don't see a big reduction there. And in paraxylene, actually, we do have -- we don't have a very good visibility of what paraxylene prices are going to be in the fourth quarter relative to the third quarter.

And so all in all, what I can tell you is that we don't expect an inventory adjustment in the fourth quarter. We think most of that is already done. We might actually have slightly positive -- most likely, we will have a positive inventory gain in this next quarter.

[Antón Fernandez, executive]

Thank you for the question. I believe that was our last question in the queue. As always, I'd like to remind you that you can find both a video recording of today's webcast as well as a transcript on our website at alpek.com.

Thank you all for participating in ALPEK's webcast. Have a great day.