Sigma Foods, S.a.b. De C.v. · BMV:SIGMAF/A
Sigma Foods, S.a.b. De C.v — Sigma Alimentos — Q1 2024 Earnings Presentation
71 slides from Sigma Foods, S.a.b. De C.v's earnings presentation, May 2024
Slide 1: Corporate Presentation 1Q24
Corporate Presentation 1Q24
Slide 2: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG Public Information
Slide 3: Sigma as Part of ALFA
Sigma as Part of ALFA Petrochemicals #1 in the production of PTA, PET and EPS in the Americas 53% of Alfa Revenues ¹ 62% of Alfa EBITDA ¹ Food Products 14 Portfolio brands sell more than US $100 Million a year, each (1) 2023 in USD; ALFA and Subsidiaries
Slide 4: Investment Highlights
Investment Highlights Contenido • Diverse portfolio of leading brands across categories and consumer segments • Supply chain and distribution network as a competitive advantage • R&D platform to drive innovation and generate consumer knowledge • History of sustained growth throughout the years • Exp
Slide 5: Multinational Presence, Local Favorites
Multinational Presence, Local Favorites 17 100+ 680K+ 1.8M US $8.7B 24y Countries Brands Points of Sale Tons of Food / LTM Net Sales Average Mgmt. 1Q24 LTM 1Q24 Team Experience Bringing communities everywhere, favorite foods to love.
Slide 6: Revenues and EBITDA by region and category
U.S. 18% Europe 27% Mexico 48% Cooked & Fresh Meats 54% Dairy 26% Latam 7% Revenues LTM 1Q24 US $8.7B EBITDA LTM 1Q24 US $965M *Revenues LTM 1Q24 distribution by region and Category Dry Meats 13% Other 6%
Slide 7: Diversified Portfolio with Leading Brands in Different Categories and Market Segments
9 Diversified Portfolio with Leading Brands in Different Categories and Market Segments Our extensive portfolio allows us to capture growth in the demand of the different market segments Cheese, Creams Cooked Meats Fresh Meats Yoghurt Others and Spreads Premium High 1 Medium Value Low Cost 14 Brands
Slide 8: Multiple Channels to Reach Consumers
Multiple Channels to Reach Consumers Modern Traditional Foodservice E-commerce
Slide 9: Extensive Supply Chain and Distribution Network as a Competitive Advantage
Extensive Supply Chain and Distribution Network as a Competitive Advantage Manufacturing 64 Facilities 179 Distribution Centers 680K+ Points of Sale 24 20 8 12 119 13 16 31 Mexico 370K+ Europe 53k+ U.S. 164K+ Latam 95K+ 6,000+ 990+ 100+ 880+
Slide 10: Consumer Centric Innovation Supported by R&D Platform
12 Consumer Centric Innovation Supported by R&D Platform Innovation – Design Thinking 1,950+ New Product Launches in the last 3 years 10% of Revenue comes from innovations Research & Development 2 Technological Centers (Mexico & Spain) 260+ Specialists 35+ Patents & IP Consumer Research 185,000+ Con
Slide 11: Diverse Workforce
Diverse Workforce 63% 16% 8% 13% 60+ 46,000+ Nationalities Employees 58% 42%
Slide 12: A Unique Story of Transformation: Growth + Profitability
A Unique Story of Transformation: Growth + Profitability Net sales breakdown Net Sales Countries Facilities Employees By geography By category (US$ B) Europe Mexico Cooked Meats Dairy U.S. Latam Dry Meats Other National Leadership 25% 2000 $0.8 4 8 12,500+ 98% 74% International Expansion 5% 9% 15% 3
Slide 13: M&A Track Record
M&A Track Record • 31 successful M&A transactions since 1997. 2019 • Experienced, dedicated team with strong track record. 2023 • Significant value creation through synergies and post- 2016 merger integration process. 2014 2017 • Financial discipline and accelerated 2015 2012 deleveraging capacity.
Slide 14: Experienced Management Team
Experienced Management Team Proven top management with an average of 21 years of experience across business areas CEO Rodrigo Fernández Sigma CEO MBA Wharton 25 Business Units Eugenio Caballero Juan Ignacio Amat Jesús Lobo Sergio Ramos Gerardo Carcoba CEO Mexico CEO Europe CEO USA CEO Latin America
Slide 15: Advisory Board
Advisory Board Member Type Member Background María Teresa Arnal Entrepreneur; 25+ years of experience in tech (Google, Twitter & Microsoft) Juan Enriquez Chairman and CEO - Biotechonomy, LLC Ángel Losada Executive President and Chairman - Grupo Gigante Independent 58% Eduardo Padilla Former CEO - FE
Slide 16: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG Public Information
Slide 17: Into the Future
Into the Future Mid-to-high single-digit EBITDA target organic growth, boosted by M&A opportunities Going forward, we are focusing on 3 pillars: Growing the core New sources of revenue Consumer Insights, Execution High Potential Opportunities Global and Optimization New Categories and Business Model
Slide 18: Grow the Core
Grow the Core Through the years we have developed a successful core business that we continue to strengthen through: • Deep consumer knowledge, innovation, and brand equity to exceed changing consumers’ needs. • Execution with excellence and efficiency to deliver a winning value proposition. • Margi
Slide 19: New Sources of Revenue: High Potential Opportunities
24 New Sources of Revenue: High Potential Opportunities Cross-fertilization to attend high-value-opportunities identified in each region: • Chorizos, Spreads, etc. • Lunch Meats, Sausages, Foodservice, etc. • Traditional Channel, Foodservice, etc. • Ready Meals, Dry Sausages, Fresh Meat, etc. Public
Slide 20: New Sources of Revenue: Growth Business Unit
New Sources of Revenue: Growth Business Unit What is Growth BU? Independent BU focused on building new categories and business models. Autonomous to ensure flexibility, and with access to Sigma´s capabilities. • Cross-functional global team + local champions • Rapid iteration; low-cost experiments •
Slide 21: Growth BU Boosting New Categories and Business Models
Growth BU Boosting New Categories and Business Models Innovative Solutions: Validated Mature New Core/Existing Businesses / Business Lab Innovation Requirements: Bottle Necks Opportunities Exposure Agile and Interactive Optimizable and Repeatable Fast and Flexible Scalable Entrepreneurial Capacities
Slide 22: Growth BU | Initiatives
Growth BU | Initiatives Global Categories New Business Models 3 2 4 1 2 3 Stages: 1 Ideation 2 Pilot 3 Launching 4 Escalation
Slide 23: 1,300+ Applications
1,300+ Applications in 53 countries 1st Edition 2nd Edition 3rd Edition 4th Edition (2019) (2021) (2022) (2023) 120+ Applications 360+ Applications 400+ Applications 400+ Applications 15+ Countries 30+ Countries 35+ Countries 35+ Countries 7 Pilots 11 Pilots 12 Pilots 15 Pilots Challenges 2024 New B
Slide 24: Our Strategy
Our Strategy Strengthening the Organization Through Enablers Innovation Anticipating consumer’s wants The way we and needs Entrepreneurship Impeccable Management think Focus on the essential, foster early Generate, pilot & scale new discussions and solve for root causes business models Agile Essenti
Slide 25: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG Public Information
Slide 26: 1Q24 Highlights
1Q24 Highlights US $ Millions All-time high quarterly consolidated EBITDA (US $264 million) Revenue EBITDA Twelfth consecutive quarter of year-on-year Revenue growth supported by record first quarter Volume Sigma +9% +38% 1Q24 EBITDA up 38% year-on-year, led by Europe, the U.S., and Mexico 2,1
Slide 27: Quarterly Volume
Quarterly Volume Volume Volume 1Q24 vs 1Q23 Volume 1Q24 vs 4Q23 (K Tons) (K Tons) (K Tons) +8% -4%* +8% +3% 1% -4%* +9% -3% 445 448 456 443 449 439 432 427 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 *37 Considering normalization effect due to divestment in all Italy operations during 3Q23
Slide 28: Quarterly Revenues
Quarterly Revenues Revenues Revenues 1Q24 vs 1Q23 Revenues 1Q24 vs 4Q23 (US $ Million) (US $ Million) (US $ Million) 2,209 2,170 2,143 2,161 +14% -2%* +15% +4% +4% -8%* +5% -2% 1,964 1,991 1,870 1,879 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 *38 Considering normalization effect due to divestment in a
Slide 29: Quarterly EBITDA
Quarterly EBITDA EBITDA EBITDA 1Q24 vs 1Q23 EBITDA 1Q24 vs 4Q23 (US $ Million) (US $ Million) (US $ Million) +37% +52% +41% +24% +16% -48% +56% +12% 264 255 229 217 192 172 167 151 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 39
Slide 30: EBITDA Margins
42 EBTIDA Margins EBITDA Margins (%) EBITDA Margins (%) 16.3 15.7 15.5 14.6 14.7 12.4 13.8 11.6 12.2 10.8 10.5 10.5 10.8 10.9 10.5 8.8 10.0 9.2 8.9 8.7 6.5 5.6 2.1 2.5 1.6* 2020 2021 2022 2023 1Q24 2020 2021 2022 2023 1Q24 Mexico Europe US Latam *42 Includes non-recurring expenses from the region’s
Slide 31: Margin Expansion in Europe
Margin Expansion in Europe • Sale of 2 manufacturing facilities in France • Disinvestment of operations in Italy Topline Footprint Actions Optimization • New geographies • Snacking High Potential • Plant-based Efficiencies Initiatives 16% annual average Price increase in Euros in 2023 • Administrati
Slide 32: Change in Net Debt
Change in Net Debt Change in Net Debt 1Q24 vs 4Q23 (US $ Million) 4Q23 EBITDA NWC CAPEX Net Financial Expenses Taxes Dividends Other 1Q24 Sources 44
Slide 33: Change in Net Debt
Change in Net Debt Change in Net Debt 1Q24 vs 1Q23 (US $ Million) * ** 1Q23 EBITDA NWC CAPEX Net Financial Taxes Dividends Other 1Q24 Expenses Sources * Sigma made the decision to voluntarily abandon the optional tax regime; payment of the income tax was made during 2Q23. 45 ** Includes maintenance
Slide 34: Capital Expenditures (Capex)
Capital Expenditures (Capex) Capex México Mexico Europa Europe 67% 63% 68% 82% 52% 75% 69% 71%C 86% 78% 76% 87% 48% 33% 37% 32% 29% 31% 25% 18% 14% 22% 24% 13% 78% 75% 72% 72% 68% 67% 2019 2020 2021 2022 2023 1Q24 2019 2020 2021 2022 2023 1Q24 EE.UU. U.S. Latam Latam 32% 33% 22% 25% 28% 28% 54% 43%
Slide 35: Financial Results
Financial Results US $ Million Volume Revenue EBITDA (K Tons) (US $ Million) (US $ Million) 965 8,684 893 8,505 1,795 7,425 741 6,817 684 652 1,773 6,347 1,740 1,705 1,701 2020 2021 2022 2023 LTM 2020 2021 2022 2023 LTM 2020 2021 2022 2023 LTM CAGR 2010-2023: 5.4% CAGR 2010-2023: 9.5% CAGR 2010-2023
Slide 36: Cost and Expense Structure LTM
Cost and Expense Structure LTM Costs of Goods Sold (COGS) Selling, General and Administrative Expenses (SG&A) (US $ Million) (US $ Million) 8% 2% Meat and Dairy Raw Materials 25% 6% Dry Ingredients 9% Direct Labor Selling Trade Products Administrative 8% 56% Packaging General Energy (Fuel, electrici
Slide 37: Leverage Ratios
Leverage Ratios Net Debt Net Debt / EBITDA** Gross Debt / EBITDA** 2,084 1,9361,8591,994 2,025 3.8x 3.8x 3.8x 1,756 1,691 1,782 3.6x 3.6x 3.4x 2.9x 2.7x 2.8x 3.0x 3.3x 2.6x 2.7x 2.3x 2.2x 2.3x 2017 2018 2019 2020 2021 2022 2023 1Q24 2017 2018 2019 2020 2021 2022 2023 1Q24 2017 2018 2019 2020 2021 20
Slide 38: Debt Profile
Debt Profile Proforma Debt Maturity (US $Million) Proforma** Local Notes (Cebures) execution: Average Life: 4.6 years 1,134 Average Rate: 7.7% (Includes CCS1) 599 ** 599 695 ● Executed credit lines to refinance 2024 Bonds 91 * 501 508 402 535 ● Looking to equalize the debt proportion with EBITDA 211
Slide 39: Outstanding Bonds
Outstanding Bonds 120 110 100 90 80 2026 70 2028 60 50 40 Amount Bond Rate YTM Maturity Date (US $ M) 2026 $1,000 5.125% 5.709% May – 2026 BBB- * BBB Baa3 Perspectiva: Perspectiva: Perspectiva: 2028 $500 4.875% 5.542% Mar – 2028 Estable Estable Estable *Credit Rating capped at parent company level p
Slide 40: Local Notes - Certificados Bursátiles
Local Notes - Certificados Bursátiles Amount Tranche Interest Rate Due Date (MXN B) 4 years $1.520 TIIE + 0.23% Mar - 2028 10 years $8.480 9.8% Feb - 2034 AAA(mex) AAA.mx
Slide 41: Dividends
Dividends Paid Dividends (US $ Million) 155 150 151 152 Amount Quarter 120 (US $ Million) 1Q23 0 75 76 2Q23 75 3Q23 0 4Q23 0 1Q24 76 17 18 19 20 21 22 23 24 In 2020 no dividends were paid. The graph shows the approved amounts for each year.
Slide 42: Income Statement
Income Statement (Thousands of pesos) (Thousands of U.S. Dollars) I Quarter 24 I Quarter 23 I Quarter 24 I Quarter 23 Revenue 36,886,769 37,217,416 2,170,364 1,991,052 Cost of sales (24,892,731) (26,851,663) (1,464,637) (1,436,381) Gross profit 11,994,038 10,365,753 705,727 554,671 Selling expenses
Slide 43: Balance Sheet
Balance Sheet (Thousands of pesos) (Thousands of U.S. Dollars) LIABILITIES AND STOCKHOLDERS' EQUITY Mar '24 (1) Mar '23 (2) CURRENT LIABILITIES: Mar '24 Mar '23 Current debt 0 11,801,700 0 651,840 ASSETS Accrued interest payable 520,881 407,065 31,232 22,483 CURRENT ASSETS: Financial Leases 534,156
Slide 44: Cash Flow
(Thousands of pesos) (Thousands of U.S. Dollars) I Quarter 24 I Quarter 23 I Quarter 24 I Quarter 23 Cash Flow CASH FLOW FROM OPERATING ACTIVITIES Profit before income tax Depreciation and amortization 2,196,963 983,093 1,264,281 961,382 128,905 57,850 67,595 51,400 Impairment of fixed assets and in
Slide 45: Guidance
Guidance US $ Million: Revenues EBITDA CAPEX* +3% +2% +14% 920 8,650 893 8,505 250 220 2023 2024G 2023 2024G 2023 2024G Public*FX rate of 18.7 MXN/USD and 1.1 USD/EUR Information *Figures do not include acquisitions
Slide 46: Meat Raw Materials – Pork and Poultry
- 2021 - 2022 Meat Raw Materials – Pork and Poultry - 2023 - 2024 U.S. Europe USD / Lb Eur / kg Chicken MSC Turkey Breast Pork Ham Pork Ham 0.8 8 3.5 1.2 0.6 6 3.0 1 0.8 0.4 4 2.5 0.6 0.4 0.2 2 2.0 0.2 0 0.0 0 1.5 J F M A M J J A S O N D J F M A M J J A S O N D J J FF MM AA MM JJ JJ AA SS O O N N DD
Slide 47: Meat Raw Materials – Dairy
Meat Raw Materials – Dairy U.S. USD / Lb Milk Class III Block Cheddar 28 2.8 23 2.3 18 1.8 13 1.3 8 0.8 EJ FF M M AA M M JJ JJ AA SS OO NN DD EJ FF M M AA M M JJ JJ AA SS OO NN DD NFDM 2 1.5 1 - 2021 - 2022 0.5 - 2023 - 2024 EJ FF M M AA M M JJ JJ AA SS OO NN DD 0 Sources: U.S. - USDA; See Appendix
Slide 48: European Energy Utility Price Reference
European Energy Utility Price Reference Dutch TTF €/MWh 400 350 300 Dutch TTF (Title Transfer Facility), is a virtual trading point for natural gas 250 in Netherlands and is the primary gas pricing hub for the European market 200 150 100 50 0 J F M A M J J A S O N D 2021 2022 2023 2024 Sources: IC
Slide 49: Exchange Rates
Exchange Rates U.S. Dollar – MXN Peso U.S. Dollar - Euro 25 1.25 23 1.2 1.15 21 1.1 19 1.05 17 1 15 0.95 J J FF MM AA M2 M J2 J JJ3 AA2 S S O O N N D D EJ FF MM AA M2 M J2J J3 J AA2 SS OO NN DD 2021 2020 2022 2023 2024 2021 2020 2022 2023 2024
Slide 50: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG Public Information
Slide 51: Sigma's ESG journey
Sigma’s ESG journey 1st materiality Updated the analysis and GRI materiality Report analysis Aligned to the 2025 SBTi Targets Sustainability Approved Commitments <2015 2016 2018 2019 2020 2021 2022 2025 Company-wide Established the • Sustainability report Sustainability Strategy, Sustainability revi
Slide 52: Our Sustainable Vision
73 1 Environment Our Sustainable Vision • Our ESG trajectory starts since 2015 with our first GRI Water Management Climate Action Clean Energy Sustainable Packaging report and materiality analysis • Sustainability became a fundamental part of our 2 Wellbeing business strategy • Our Sustainability ef
Slide 53: Environment
Environment We reduce our environmental impact by using natural resources more efficiently 16% reduction on CO2 eq emissions related to our manufacturing facilities and transportation fleet, per ton of food produced (compared to 2015) 7,880+ virgin plastic tons avoided in our packaging since 2019 1.
Slide 54: Greenhouse Gas Reduction Objectives
Greenhouse Gas Reduction Objectives Scope 1 Scope 2 Scope 3 20% 20% 9.8% SBTi is a corporate climate action NGO that works in association with CDP, the United Nations Global Compact, the World Resources Institute, Worldwide Fund For Nature and the We Mean Business Coalition commitments In 2023, Sigm
Slide 55: Wellbeing
Wellbeing 1,900+ leaders participated in the program Lideres Conscientes 43% reduction We establish conditions that motivate and in the accident rate set against the base year of 2018 facilitate to our collaborators the adoption of habits that increase their quality of life We launched the Diversity
Slide 56: Health and Nutrition
Health and Nutrition We promote healthy lifestyles through We invested US $38.8M our innovative and high quality product in research and development offering 1.8 times more sales from the health and wellness portfolio set against 2019 80+ products with improved nutritional profiles throughout 2022 2
Slide 57: Shared Value
We create economic and social value Shared Value throughout our practices and we share them to incite the development and strengthen our supply chain 175+ million food portions donated since 2015 Suppliers that represent 51% of the acquisition of beef raw materials are evaluated in ESG criteria 130+
Slide 58: Our Governance
Our Governance Boards and Committees ESG Community Internal Audit & Controls Policies Published: • Controllership • Global Code of Conduct • Internal Audit • Environmental, Social and Governance Board of Directors • Research, Innovation and Policy Sustainability Chief Officer • Internal Control • Au
Slide 59: ESG Scores
ESG Scores Supplier Engagement: A-F Water: A-F Climate: A-F Risk: 0-40+ Score: 100-0 2023 B B B 24.6 42 2020 D C C 35.1 N/A Industry Average C C C 33.6 22 Best Scores per organism – CDP: A / Sustainalytics: 0 / S&P: 100 CDP: Carbon Disclosure Project
Slide 60: Appendix A: Key Raw Material Price References
Appendix A: Key Raw Material Price References This appendix provides a detailed explanation on how to obtain key raw material price references from public sources. This is not intended as an exhaustive list of the company´s raw materials nor is it a direct representation of the company´s actual cost
Slide 61: USA – USDA PM Ham, 23-27# Trmd Sel Ham
USA – USDA PM Ham, 23-27# Trmd Sel Ham https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Type in 6 2 Ctrl + F, type in 23 − 27 3 7 4
Slide 62: USA – USDA Pork Trimmings - 72% Trim Combo, FOB Plant
USA – USDA Pork Trimmings - 72% Trim Combo, FOB Plant https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Type in 6 2 Ctrl + F, type in 𝑇𝑟𝑖𝑚 𝐶𝑜𝑚𝑏𝑜 3 7 4
Slide 63: USA – USDA Pork Trimmings - 42% Trim Combo, FOB Plant
USA – USDA Pork Trimmings - 42% Trim Combo, FOB Plant https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Type in 6 2 Ctrl + F, type in 𝑇𝑟𝑖𝑚 𝐶𝑜𝑚𝑏𝑜 3 7 4
Slide 64: USA – USDA Beef Trimmings, National, FOB Plant, Fresh 50%
USA – USDA Beef Trimmings, National, FOB Plant, Fresh 50% 5 2 6 3 7 1 4 1 10 11
Slide 65: USA – USDA Chicken - MSC, 15-20% Fat, Fresh
USA – USDA Chicken - MSC, 15-20% Fat, Fresh https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Type in Type in 6 2 Ctrl + F, type in MSC, 15 3 7 4
Slide 66: USA – USDA Turkey - MST, Some skin, under 20% fat, Fresh
USA – USDA Turkey - MST, Some skin, under 20% fat, Fresh https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Typeinin Type 6 2 Ctrl + F, type in 15 − 20 3 7 4
Slide 67: USA – USDA Turkey - Breast, Young Tom, Boneless & Skinless, Fresh
USA – USDA Turkey - Breast, Young Tom, Boneless & Skinless, Fresh https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Typeinin Type 6 2 Ctrl + F, type in 𝐵𝑜𝑛𝑒𝑙𝑒𝑠𝑠 3 7 4
Slide 68: USA – USDA Turkey - Thigh Meat, Boneless & Skinless, Fresh
USA – USDA Turkey - Thigh Meat, Boneless & Skinless, Fresh https://mymarketnews.ams.usda.gov/filerepo/reports 1 5 Pop − up Typeinin Type 6 2 Ctrl + F, type in 𝐵𝑜𝑛𝑒𝑙𝑒𝑠𝑠 3 7 4
Slide 69: USA – USDA Dairy - CME, Milk Class III
USA – USDA Dairy - CME, Milk Class III https://mpr.datamart.ams.usda.gov/ 1 Pop − up 7 2 3 4 8 6 5
Slide 70: USA – USDA Dairy - Block Cheddar Cheese 40lb
USA – USDA Dairy - Block Cheddar Cheese 40lb https://mpr.datamart.ams.usda.gov/ 1 Pop − up 7 2 3 8 4 6 5
Slide 71: www.sigma-alimentos.com
Public Information www.sigma-alimentos.com Contact: investorrelations@sigma-alimentos.com