Grupo Industrial Saltillo SAB de CV

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Earnings Call Transcript 2020-Q4

[Melanie Carpenter]

Okay, folks, we are going to begin. All our attendees are in. So first off, good day, everyone, and welcome to GIS' Fourth Quarter 2020 Earnings Call. Joining us today is GIS' Chief Operating Officer, Mr. Jorge Rada; GIS' Chief Financial Officer, Mr. Saúl Castañeda; and GIS' Investor Relations Manager, Mr. David Sandoval. Please be advised, this Zoom call is for investors and analysts only.

During this call, they're going to be discussing GIS' performance as per the earnings that we issued on Monday. If you didn't receive them, it's -- the report is now available on the website, which is gis.com.mx in the Investor Relations section. We encourage you to follow along on the on-screen presentation. [Operator Instructions] We are going to have a question-and-answer session after management's presentation. We'll give you instructions on how you can queue yourself up for questions at that time.

Just some housekeeping items. Just remember, the management is definitely going to make forward-looking statements, and they may be based on information that's currently available. And they may subject -- they may change due to a variety of factors. So for more detail on that, the earnings release has the disclaimer. And also, all the figures that they are going to be discussing are in U.S. dollars, unless otherwise noted.

So it's now my pleasure to turn things over to management. I'm going to turn the call over to Mr. Saúl Castañeda, the CFO of GIS, to begin the presentation. So please go ahead, Saúl.

[SaúlCastañeda de Hoyos, executive]

Thank you very much, Melanie, and thank you all for joining us today. On behalf of GIS, we hope that you and your families are in good health.

Starting with the fourth quarter results and its highlights, I would like to share with you that we continue with the outstanding results across our 3 businesses. Last quarter, we reported GIS' best EBITDA for the last 8 quarters. In the fourth quarter, our EBITDA was $39 million, 130% higher than 4Q '19 and turned out to be a strong second half in terms of EBITDA and profitability margins.

Since 2019, we have been implementing a rightsizing strategy across our global operations. Even though the positive performance we start to see at the beginning of the year was interrupted by the pandemic in the second quarter, the improvements we made, along with the market recovery, led us to achieve excellent results during the second half of the year. In the back half of the year, our EBITDA margin was 18%, the highest profitability level since 2018, boost by higher volumes, operating efficiencies and rightsizing efforts I already mentioned.

Regarding sales performance. Draxton recovered volumes in all locations where it has operations. Our plant in Wuhu, China had outstanding volume recovery. Globally, we achieved 14% growth year-over-year and an EBITDA margin of 22%. Vitromex grew 21% in Mexican pesos over the fourth quarter of 2019 due to the dynamic remodeling sector in Mexico during the second half of 2020. We achieved the highest domestic sales in the company's history. Cinsa grew 26% in Mexican pesos compared to the fourth quarter of 2019, achieving the highest sales in the last 7 quarters. This was mainly due to a significant increase in exports and the exponential growth on the e-commerce channels. These measures led us to an EBITDA margin of 12%.

As we have been mentioning in recent quarters, our financial position remains solid, and it's continuing to improve. If we analyze the second half of 2020, our EBITDA will have been higher than $150 million. We have made significant cost reductions in our different businesses units, and we plan to continue reductions in this area. Our net debt-to-EBITDA was 1.9x, far below last quarter. Even recent developments and performance expectations, we believe that by the end of the second quarter of 2021, the company will reduce its leverage ratio to 1.4x, providing us with more strategic flexibility.

We also improved our cash levels, going from $76 million in the third quarter to $93 million at the end of last year. GIS stock offers an attractive return for our shareholders. We recently announced a dividend payment proposal of MXN 1.97 per outstanding share, which will be submitted at our next Annual General Shareholders' Meeting. This represents an average dividend yield for the 2020/2021 period of 5.7%. In addition, we'll also be proposing cancellation of 9.7 million repurchased shares.

After suffering major impacts from the COVID-19 pandemic during the second quarter of the year, all of our business units recovered in the second half, thanks to the internal efficiencies that we implemented. This led to results that were even higher than pre-pandemic levels in sales and EBITDA.

As I previously mentioned in the highlights, GIS has maintained its solid financial position with a net debt-to-EBITDA of 1.9x and an expected 1.4x for the second quarter of 2021. We have continued to maintain a very disciplined and responsible approach to our debt policy, even making early debt payments last year for up to $20 million to pay down our senior secured credit agreements. We benefited from financial flexibility since, as you know, thanks to the refinancing carried out during 2019, we didn't have significant payments for the next couple of years.

I will now pass the presentation over to Jorge Rada. Please, Jorge, go ahead.

[Jorge Garza, executive]

Thank you, Saúl, and good morning, everyone. I hope you and your families are staying safe and are in good health.

Well, in the fourth quarter, we saw a significant recovery across all our business units, which was highly influenced by the market recovery of the main economies where GIS operates. Based on our efficiency programs we have been implementing, we will be very well prepared to take advantage of this recovery.

Despite being the first country affected by the COVID-19 pandemic, China has effectively controlled its cases, and its economy grew more than 2% in 2020. Based on different forecasting sources, we expect 2021 to be a very good year for the Chinese economy.

In the U.S., even though it is a country with the highest number of cases, they have accelerated the vaccination rollout against COVID-19. Vaccine supplies are expected to increase during the month of March, improving immunity across the country and enabling the economic recovery to continue. We expect that by the second quarter, the United States GDP will return to pre-COVID levels.

Europe's GDP was seriously impacted during the second quarter. After the different lockdowns and restrictive measures established in the European Union, we expect a gradual recovery throughout 2021.

Regarding Mexico, recovery is likely to be slower than in these other regions, but we also expect to see pre-pandemic GDP levels by the first half of 2022.

I will now turn to the automotive industry. In North America, demand for light vehicles continues to recover, supported by low interest rates and government stimulus packages. There is optimism in the U.S. industry with the possibility of new economic stimuli during the year and the rapid development of the vaccination program against COVID-19.

Even though the second wave that hit Europe in the third quarter of 2020 has slowed down industry recovery there, vehicle sales showed an improvement this last quarter, thanks to incentive programs. Volumes in Europe benefited during the fourth quarter of 2020 from the export of vehicles to different countries in Asia, and we are optimistic that this trend will continue in 2021.

In China, we saw a 6% increase in vehicle production year-over-year and an 8% increase in sales. China continues to improve its levels due to domestic demand and economic growth.

Now moving on to Draxton's performance. During the fourth quarter, our global foundry volume increased 12% year-over-year due to recovery in our main markets and new programs launched. The numbers were 7% in North America and 18% in Europe and Asia. Our global sales grew 14% year-over-year due to volume increases and the impact to our sales price due to indexation of scrap prices, which rose in the last months of 2020.

EBITDA closed at $34 million, which is 24 -- sorry, 22% higher than in the fourth quarter of 2019. Our EBITDA margin rose from 20% to 22% due to the efficiency, productivity and cost initiatives implemented throughout the business. During 2020, Draxton secured its position as a leader in the brakes component sector, winning new contracts for 84,000 tons, which will be launched in the coming 2 years.

Moving forward with our strategy to grow and diversify our business in the hybrid and electric vehicle sector, our European division secured new businesses for our plants in Spain, 1 program to produce and machine stator carriers for hybrid cars and 1 program to machine and paint components for electric truck battery holders or supports.

As part of our commitment to add value for our customers, we have created also the DCCC, or Differential Case Competence Center. This engineering organization will be focused on differential cases, which are a key component of the e-drives, or electric drives, used on electrified vehicles and is complementing our other 2 centers, which is the BCC, which is Brake Competence Centers, and the machining technology unit that are the most important competence center that we have formed in Draxton.

In order to share lessons learned and best practices among all plants, we have also created DKM, which we call it Draxton Knowledge Management, which is a system that supports the more than 250 projects that are in the process of being launched and which amount to more than 200,000 tons in our order book.

Now moving to Vitromex. When comparing the fourth quarter of 2020 with the fourth quarter of 2019, we can see a 21% upside in revenues. In Mexico, we continue to observe a high level of activity associated with home remodeling, and derived from this, in the fourth quarter, we attained the highest domestic sales in the company's history.

We associate the extraordinary performance of the company to our presence, service and flexibility strategies as well as to our portfolio renewal in our cost improvement. Speaking of which, during this quarter, we achieved a 12% manufacturing cost reduction. Even though this is a big achievement, we will continue to work on our efficiencies to keep reducing our costs and to improve our profitability in the coming quarters.

Management of working capital at Vitromex resulted in strong cash flow generation of nearly MXN 650 million in the year and MXN 100 million in the quarter. Higher revenues, lower production costs and optimization of fixed costs led to an EBITDA of MXN 87 million in the quarter. In the U.S. market, the strategy -- the new strategy has been established, which includes commercial and operating tools to boost revenue during 2021. Regarding the Latin American market, we are very optimistic, witnessing now ordinary operations at borders and a steady increase in shipments.

Regarding Cinsa, our last -- third business. The business continues to perform well and increased its sales in Mexican pesos by 26% against the fourth quarter of 2019, obtaining its highest sales in the last 7 quarters. This growth was driven mainly by U.S. exports and our Graniteware brand. Our operating efficiencies allowed us to reduce our costs 11%, and just as Vitromex, we are sure there are still opportunities to continue improving our costs. Due to higher sales volumes and cost reductions, our EBITDA margin for this quarter was 12%, the highest level of profitability since 2012.

Now I will now move to comment or to comment on some recent economic and market events. As you may know, the global semiconductor shortage is affecting not only the automotive industry but the manufacturing sector in general. Even though some of our customers are halting operations at some of their plants, we expect a marginal volume impact on our operations in the first half of this year, and we foresee a strong volume recovery during the second half of this year.

Regarding scrap iron. Economic recovery in the U.S. and China, along with bad weather, has caused a global shortage that has impacted the prices of this raw material. However, the effect of this raw material's cost increase will be offset based on our price indexation formulas, which are standard in this industry.

In mid-February, as a result of issues caused by extreme weather in some regions of Mexico and the U.S., some of our plants suffered minor disruptions due to energy shortages. Our volume demand was not affected. It was just postponed to the next couple of months.

And now I will pass the presentation back to Saúl Castañeda.

[SaúlCastañeda de Hoyos, executive]

Thank you, Jorge. Regarding the outlook for our businesses. In the short term, we expect Draxton to continue recovering along with the industry, supported by our cost-reduction and operating efficiency strategies that are intended to continue increasing our EBITDA margins. In order to align our product portfolio with the market trends, we are working to maintain a high compatibility with hybrid and electric vehicles.

In the medium term, we will continue to benefit from the higher regional content established in the USMCA and the relocation of customer to Mexico. Finally, we will continue to leverage our engineering and design capabilities, which are now supported by our new competent centers, which focuses on differential cases, and our system to promote continuous learning and improvement.

At Vitromex, as we previously said, we will continue to work on our cost efficiency and increase the share of exports in the total sales of the company. We expect that in the medium to long term, we will be reinitiating regional growth in the U.S. as well as continuing to consolidate our leadership in the value segment and gain market share.

Finally, at Cinsa, we will focus on expanding our footprint in the U.S., leveraging our brand portfolio. We will continue accelerating the e-commerce channel and all of our innovation initiatives to revitalize traditional channels. We are sure that in the short term, we will continue to see improvement in our cost competitiveness.

This concludes my remarks for today. Thank you for your attention. Operator, please begin the Q&A session.

[Melanie Carpenter]

Thank you, Saul. [Operator Instructions] And we have -- our first question is from Alejandro Azar.

[Alejandro Azar Wabi, analyst]

Can you hear me?

[Jorge Garza, executive]

Yes, Alejandro.

[Alejandro Azar Wabi, analyst]

Alejandro Azar from GBM. First of all, Saúl, congratulations on your new position. I am really happy for you.

And if I move on to the questions, I have several ones. First, in Draxton, I'm a bit surprised by your performance in the fourth quarter above the industry. Would you see -- would you say that GISSA has the contracts and the position to continue growing above industry levels during 2021 and 2022? And then if you could move on to the -- or give us more color regarding your capacity utilization per region.

[Jorge Garza, executive]

Okay. You want to go and answer the first question, and then you continue with the second or third questions, Alejandro?

[Alejandro Azar Wabi, analyst]

Yes, if that's easy for you.

[Jorge Garza, executive]

Yes. Yes, no problem. Sure. Look, the performance of Draxton in the fourth quarter was basically for 2 reasons. One is the strong recovery in all the markets which we are operating. Remember that the second quarter was very, very slow. Actually, some of our customers were stopped for -- or shut down for 10 weeks, something like that, in the second quarter of last year. So second quarter was so bad that the recovery was very strong. The pipeline, the inventory was totally depleted. So we had to accompany the industry by filling up the pipeline of the inventory. This is one.

We will continue with this trend in the year 2021 because we see the shipments -- shipment releases are very strong in the next quarters. So we really think that the recovery, along with the vaccination programs in the countries, will continue supporting the volumes in this industry worldwide or at least in the market where we operate, which is North America, Europe and China. This is one.

For the future, what I can tell you is that we have been very successful in the market getting new programs. As we mentioned in the presentation, last year, we got 84,000 tons of new programs. Of course, some of these programs will be replacement program because in this industry, you have always to get the replacement programs for some programs that are going to phase out in the midterm.

But what I can tell you is that we expect in the next couple of years that based on the new programs that we have obtained in the last 2 years, our volumes will be about -- our sales, actually, will be about 10% or more higher than the pre-pandemic levels. Remember, something that was very important, we haven't made a lot of noise about this, but in Mexico, we launched, in 2020, a third line in our plant in Irapuato, in Evercast, okay? That line is additional volume, and it's going to be filled up in the next months. Actually, we are operating at a very good rate already in Irapuato.

And if we continue talking about other plants, for example, China, China by the end of the year, we were breaking records of volumes. Because that plant has been there for many years, but we never sold as much as we sold in the last quarter of 2020. And based on the program that we have obtained from the customers, we expect these volumes to continue growing.

So just as a summary of this answer, we expect a growth that is higher than the industry, for sure, for the reasons that I have mentioned. We will take advantage of the relocation of customers to Mexico because of the USMCA. We are already seeing that migration, and we are being very successful in getting most of the programs, especially for brakes, that are being relocated to Mexico. So most probably in Mexico even, we might need to add additional capacity soon.

[Alejandro Azar Wabi, analyst]

Perfect. Jorge, when you mentioned 10% growth, that's in dollar terms, right? It's not volumes.

[Jorge Garza, executive]

Yes.

[Alejandro Azar Wabi, analyst]

And if I can ask you about the fourth quarter. Did you have a metal lag impact due to the increasing scrap prices during the quarter?

[Jorge Garza, executive]

I can tell you, yes, but it was not as high as it will be in the first quarter of 2021, okay? In 2021, remember that this -- we have a formula that is, how to say, indexation of the scrap prices to our sales prices, okay? And there is a gap or a lag of about 2 to 3 months in which when the prices go up in the next couple of months, we transfer these price increases to our customers, okay?

So definitely, there was a lag, but we expect that this is going to be temporary. And maybe by the second quarter of 2021, the prices are going to continue to come back to normal. Maybe never to the original level because when the pandemic was at the highest level, the prices of the scrap were really low. Now the prices went up dramatically, and we expect the prices to go back to normal. When this happens, then the metal lag effect will be the opposite. So what we are seeing in the first quarter that we will report for sure in the first quarter, we will see the opposite effect when the prices start to go down in the second and third quarter of this year.

[Alejandro Azar Wabi, analyst]

Excellent, Jorge. And if I can move on to my second question on Vitromex. We are seeing extraordinary levels of demand across the industry. What are you seeing in terms of your volumes? How is your capacity utilization in Vitromex? And would you mention that these levels of volumes of these high levels of operating leverage is driving you to those extraordinary margins? What would you say that -- or would you say that in 2021, you would expect Vitromex to have margins around 8% and 9%, I mean EBITDA margins?

[Jorge Garza, executive]

Well, the volumes at Vitromex are, I have to say, influenced a lot by the trend in the market at this moment that is remodeling, okay? Since many, many people are not going out for vacation or for rest to eat, having dinner at restaurants, we see that many people, not only in Mexico but around the world, are making remodeling of their homes, okay? And this has created an extraordinary demand that we continue to see this year. When is this going to stabilize or come back to normal? We don't know yet, but definitely, there is a chance that this boom will, let's say, stop.

And at that moment, we expect the construction of new buildings and houses to go up again. So we have to be careful to observe the development of this market because we may need to continue producing as much as we are doing right now, now for a different reason, but the reason is new construction, okay? So yes, our plants are running at full capacity at the moment, and we are improving a lot our efficiency, our productivity, our quality, and we are improving also our presence and service level to the customers in all the markets where we participate.

So we -- our team is very focused on improving efficiencies and trying to give a higher output so we can take advantage of this demand and increase our volumes, okay? So in 2021, at least for the first year, we continue to see very strong demand for our products in Mexico, and we are developing our new strategy to reenter the market in the U.S., where we expect, by the second half of this year, to be increasing our volumes there.

[Alejandro Azar Wabi, analyst]

Excellent. And my last question, Jorge. On your press release, you mentioned that by analyzing your second half of 2020, you will get to $150 million in EBITDA. Would it be fair to say that that's your objective for 2021?

[Jorge Garza, executive]

Well, yes. We just need to remember that the second half of 2020 was relatively high in volumes based on the recovery of the markets. But we see this year to be more or less as strong as the second half of last year. So if this repeats, we think that that will be the level, the, let's say, run rate that we will have from now on. And we continue to grow the volumes, as I told you before in the first question. This number will continue to grow in the next years.

[Alejandro Azar Wabi, analyst]

Excellent. One more, if I may. On your CapEx, did you have some deferrals during 2020 that we are going to see in 2021? How do we think about that?

[Jorge Garza, executive]

Yes, we -- no. Yes, we had to stop some projects, definitely the project that we could postpone. Some projects last year were not postponed because we have commitments to customers, okay? Especially in Draxton, when you agree that the start of production of a new program is going to be in certain date, you better be on time with the new investment, okay?

So some of those commitments were there. We just talked to the customers, and if they were sure that these dates would be sustained, then we kept the investment. But many other investments, we had to stop or postpone. So this year, we -- if you would like to hear a number, the number of CapEx for this year will be around $40 million to $50 million, which is more or less normal standard CapEx level for Draxton.

[Melanie Carpenter]

Okay. We're going to take one from the webcast. We have Orlando Zelaya, who is asking about Mexico vehicle production and exports, "There were some weakness during the beginning of 2021. Has this had an impact on GIS' operations? Does it have to do with the January lockdowns in certain sectors? Or does it have to do with the natural gas issue in Texas?"

[Jorge Garza, executive]

Well, there are several issues. One of the issues, the lockdowns, in our opinion, in North America have not been a strong impact anymore. The -- maybe the semiconductor issue, which is a shortage of these kind of materials in the automotive industry, is affecting the volumes in this first quarter of the year, but this is going to be temporary. We expect that this is not affecting demand fundamentally. This is just affecting a little bit some plants that are shutting down for a couple of weeks until they come back to normal. So after this stops, I mean the shortage is eliminated, then we expect a strong recovery for the second quarter -- sorry, second quarter or second half of the year.

So we don't see this as a fundamental impact in the industry based on demand. It's based on maybe on the shortage of this semiconductors. And maybe the weather was another issue. You remember that Texas and the north of Mexico were impacted. But in general, we don't see that -- this to be staying for many months.

[Melanie Carpenter]

Excellent. [Operator Instructions] We actually -- we received another one, which says -- it's from Jorge Lagunas, and he says, "Regarding your expectation of a lower net debt-to-EBITDA ratio of 1.4 for 2Q '21, do you plan to use operating cash flow for prepayments?"

[Jorge Garza, executive]

Saúl?

[SaúlCastañeda de Hoyos, executive]

Sure. I can take that, Jorge. Thank you. Regarding cash flow, I will say it is important to mention that our top priority will be operation needs always, working capital and CapEx. But definitely, we will be analyzing any strategic opportunity related with finance, refinancing or prepayments. But it is important to mention that operation needs will be top priority always.

[Melanie Carpenter]

Okay. And then he has a second question, which is, "What are your expectations regarding your portfolio? Do you want to continue with organic growth or maybe some inorganic opportunity or maybe a divestiture of any sort?"

[Jorge Garza, executive]

Well, it's an interesting question. Regarding our portfolio, we -- I mean at the moment, we have 3 businesses. The bulk of the business is Draxton, which is, by far, the #1 in terms of size. The second one is Vitromex and then Cinsa, which is relatively small compared to the other 2 businesses.

In the automotive industry, especially in our sector, in Draxton, we see that there may be opportunities for consolidation of the industry in the next couple of years. So based on our balance at the moment, and based on our capabilities that we have developed to integrate businesses that we have acquired in the recent past, we see that Draxton is very well positioned to take -- or participate strongly in this potential consolidation of the industry.

So answering the question, yes, Draxton may -- is going to grow organically, but is also considering or will consider, in the moment that it comes to -- as an opportunity, the possibility to make an acquisition. We don't have, at the moment, anything firm, but we are considering that this is -- this possibility may come. In the case of Vitromex, Vitromex is a core -- is part of our core as GIS. And we can say that we will continue attending the markets in Mexico, U.S. and Latin America. At the moment, we are not considering any acquisition.

In the case of Cinsa, it's a small business. We plan to continue with Cinsa. However, in case that there is an opportunity and somebody would like to -- I mean it would make sense for another company to take that -- the Cinsa business, we'd consider it. We have said that in the past, and this is not new. But at the moment, what I can tell you is that we don't have any decision or anything that we can see in the short term to make an acquisition or a divestiture.

I don't know if I answered the question. It was a long answer, but I tried to make -- to do -- sorry, to do the best, to give you a very good picture of what we plan to do.

[Melanie Carpenter]

No, that's excellent Jorge. Jorge Lagunas said, one more is -- which is, "If you can share any consolidated or granular guidance for 2021 in terms of EBITDA and/or revenues." I think Saúl will take that.

[SaúlCastañeda de Hoyos, executive]

Sure. Correct. I can take this one, Melanie. Let me tell you that we are pretty aware of relevance of guidance in markets. I will say that in the other hand, at this moment, a lot of companies are analyzing this practice. And I will also mention that GIS has, moving forward, providing general outlook, perspectives and CapEx, as you know, in our earnings release. But I will say also that definitely, we're going to make a deeper analysis to find out if we can complement our forward-looking probably with any other important asset sales or EBITDA. We can take a look on this.

[Melanie Carpenter]

Okay. Excellent. We have one from [ José Salse ]. He's asking, "The excellent dividend of MXN 1.97 per share, was that a catch-up for not having a dividend declared in 2020? Or was it for having fewer projects in Mexico?"

[SaúlCastañeda de Hoyos, executive]

I can take that. You can complement me if you want. Sure. I would say that it is important to remind that, as he mentioned, in 2019, we didn't have -- in 2020, I'm sorry, we didn't have payment of dividend. So yes, it's a catch-up but also an important dividend yield for 2020. And as we mentioned during the conference, this will represent around a little less than 6%, around 5.7%, dividend yield -- average dividend yield in both years. So even when we do not have a specific policy, dividend policy, we would like to have this objective internally.

But I wouldn't say that it is a good dividend because we don't have projects. If you can take a look in the earnings release, you can see that we will have around $50 million related to CapEx. So I would say regarding the excellent results of the company and the solid financial position that we are able to have this catch-up dividend of previous year and the 2021 dividend.

[Melanie Carpenter]

Excellent. Thank you, Saul. I don't see any more questions. [Operator Instructions] Alejandro Azar has a follow-up.

[Alejandro Azar Wabi, analyst]

It's me again. Just one last one. On Cinsa, as you mentioned on your comments, you are seeing a strong growth in your exports to the U.S. Would it be a fair if we take the same absolute figure that you guys sell -- sold in the U.S. during the second half for analyzing it for 2021? I mean just on your exports.

[Jorge Garza, executive]

I would say so, Alejandro. I think that our team is receiving -- I mean it's making a very good job at exploiting, I would say, the North American market. And we see still a very strong demand from the markets that we are servicing in the U.S. Actually, we have a brand that we are licensing. The name is Graniteware.

This Graniteware brand has been very successful in the U.S. So we expect the sales in that market to continue very strong. So this year, actually, we see, in the next months, we have the demand very strong, and we don't see how we could not assume that the levels will be the same or even better.

[Alejandro Azar Wabi, analyst]

And also, Jorge, I think that your profitability levels are high because of this type of sales, this value of product mix added to the whole Cinsa, right?

[Jorge Garza, executive]

Not only that, Alejandro. I can tell you that more or less the same as Vitromex. We have implemented a very strong recovery program. We have a very good team because we have in our team people who used to work in the company before, who know exactly what to do, what levers to move and how to improve the productivity of the plants and the efficiency of our operations in general.

So we have obtained very good cost reductions, and at the same time, we have been very successful in marketing and selling, okay? So the 2 components are part of the equation. So it's not only the sales, the higher sales, but also cost and efficiency improvements.

[Melanie Carpenter]

And we actually -- we don't see any more questions. We're just going to pause one second if anyone has any final question asked through the webinar, through the webcast. And we're not seeing anything at this time. So I'm going to turn it back to Saúl Castañeda for some closing remarks.

[SaúlCastañeda de Hoyos, executive]

Thank you, Melanie. Thank you once again for your interest in GIS. Please don't hesitate to contact us if you have further questions, and we hope you stay healthy and safe. Have a nice day.

[Jorge Garza, executive]

Have a nice day. Thank you.

[Melanie Carpenter]

Thank you, everyone. Bye-bye now.