Sigma Foods, S.a.b. De C.v. · BMV:SIGMAF/A
Sigma Foods, S.a.b. De C.v — Sigma Alimentos — Q3 2022 Earnings Presentation
60 slides from Sigma Foods, S.a.b. De C.v's earnings presentation, October 2022
Slide 1: Corporate Presentation 3Q22
Corporate Presentation 3Q22
Slide 2: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG
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 39% of Alfa Revenues ¹ 33% of Alfa EBITDA ¹ IT + Telecom Food Products 11 Portfolio brands sell more than US $100 Million a year, each 8 out of 10 Mexican Corporates use Axtel’s IT and Telecom services (1)
Slide 4: Investment Highlights
Investment Highlights • Diverse portfolio of leading brands across categories and consumer segments • Proprietary R&D platform to drive Product Innovation and generate consumer knowledge • Extensive supply chain and distribution network with access to 670K+ points of sales • Balanced Culture: result
Slide 5: Multinational Presence, Local Favorites
Multinational Presence, Local Favorites 18 100+ 670K+ 1.7M US $7.2B 23y Countries Brands Points of Sale Tons of Food / Year Net Sales LTM 3Q22 Average Mgmt. Team Experience Bringing communities everywhere, favorite foods to love.
Slide 6: Revenues and EBITDA LTM 3Q22 by region and category
USA 19% Europe 30% Mexico 44% Cooked & Fresh Meats 57% Dairy 21% LatAm 7% Revenues LTM 3Q22 US $7.2B EBITDA LTM 3Q22 US $686M *Revenues LTM distribution by region and Category Dry Meats 15% Other 7%
Slide 7: Leading brands across markets, categories and consumer segments
Leading brands across markets, categories and consumer segments 100+ Brands 11 Brands with Net Sales over US $100M. * Yoplait is licensed by third party
Slide 8: Leading brands across categories and consumer segments
Leading brands across categories and consumer segments Our broad portfolio helps us capture demand and top line growth across different market segments Cheese, Creams Packaged Meats Fresh Meat Yogurt Others & Spreads Premium High * Middle Value Low-cost 10% of our revenues come from licensed brands*
Slide 9: Multiple channels to reach consumers
Multiple channels to reach consumers Modern Traditional Foodservice E-commerce
Slide 10: A unique story of transformation: Growth + Profitability
A unique story of transformation: Growth + Profitability Net sales breakdown Net Sales Countries Facilities Employees By geography By category (US$ Bn.) Europe Mexico Cooked Meats Dairy USA Latam Dry Meats Other National Leadership 25% 2000 $0.8 4 8 12,500+ 98% 74% International Expansion 5% 9% 15%
Slide 11: Extensive supply chain and distribution network
Extensive supply chain and distribution network 65a Manufacturing Facilities 184b Distribution Centers 670K+ Points of Sale 25a 23a 6 11a Mexico 112b Europe 18 USA 17b LATAM 37b 350K+ 62k+ 164K+ 98K+ a - Changed how manufacturing facilities are counted (i.e. adjacent facilities are now considered a
Slide 12: Consumer centric innovation supported by proprietary R&D platform
Consumer centric innovation supported by proprietary R&D platform Consumer Research 208,000+ Contacts / year Proprietary Mathematical Models Iterative innovation process based on Design Thinking 1,600+ New Product Launches in the last 36 months 9% of Consolidated Revenue comes from innovations Resea
Slide 13: Diverse Workforce
Diverse Workforce 62% 18% 7% 13% 60+ 44,000+ Nationalities Employees 60% 40%
Slide 14: M&A Track Record
M&A Track Record • 30 successful M&A transactions since 1997. 2019 • Experienced, dedicated team with strong track 2016 record. 2014 2017 2015 2012 • Significant value creation through synergies and 2013 post-merger integration process. 2009 2010 2007 • Financial discipline and accelerated deleverag
Slide 15: Experienced Management Team
Experienced Management Team Proven top management with an average of 23 years of experience across business areas CEO Rodrigo Fernández Sigma CEO MBA Wharton 23 Business Units Eugenio Caballero Ricardo Doehner Jesús Lobo Sergio Ramos Gerardo Carcoba CEO Mexico CEO Europe CEO USA CEO Latin America CE
Slide 16: Advisory Board
Advisory Board Member Background Member Type María Teresa Arnal* Latin America Business Director - Stripe Diego Calderón Proprietary Independent María Eugenia Casar* Former Assistant Executive Director - The World Food Program, UN 23% Juan Enriquez* Chairman and CEO - Biotechonomy, LLC Álvaro Fernán
Slide 17: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG
Slide 18: 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 19: Grow the Core
Grow the Core Through the years we have developed a successful 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. • Margin Exp
Slide 20: Margin Expansion in Europe: Double-Digit Target
Margin Expansion in Europe: Double-Digit Target Footprint Optimization Strategic Initiatives International Business Unit • Increase capacity utilization • Adjacent categories and white-spaces • Focus on high-margin markets • Restructure end-to-end supply chain • New channels • Tailored products as a
Slide 21: New Sources of Revenue: High Potential Opportunities
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
Slide 22: 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 23: Growth BU | Initiatives
Growth BU | Initiatives Global Categories New Business Models Entrepreneurial Ecosystem New Business Models Future Foods Power Connections Green Tech
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, vet, pilot & scale new discussions and solve for root causes business models Agile Cu
Slide 25: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG
Slide 26: 3Q22 Highlights
3Q22 Highlights US $ Millions Revenue EBITDA Record quarterly Revenue driven by double-digit growth in Mexico, the U.S. and Latam year-on-year +9% -14% Sigma 3Q22 EBITDA down 14% year-on-year due to inflationary cost pressures, mainly affecting operations in Europe 1,879 176 Net Debt to EBITDA
Slide 27: Quarterly Volume
32 Quarterly Volume Volume Volume 3Q22 vs 3Q21 Volume 3Q22 vs 2Q22 (K Tons) (K Tons) (K Tons) +5% +1% +5% +3% -1% 2% -5% -1% 428 423 432 424 445 439 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 28: Quarterly Revenues
33 Quarterly Revenues Revenues Revenues 3Q22 vs 3Q21 Revenues 3Q22 vs 2Q22 (US $ Million) (US $ Million) (US $ Million) +15% -4% +14% +15% +1% +1% -2% +3% 1,870 1,879 1,707 1,729 1,768 1,711 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 29: Quarterly EBITDA
34 Quarterly EBITDA EBITDA EBITDA 3Q22 vs 3Q21 EBITDA 3Q22 vs 2Q22 (US $ Million) (US $ Million) (US $ Million) 201 -6% -68% +4% -3% -5% -30% -28% -6% 181 182 176 172 161 151 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 30: Quarterly EBITDA Margins
35 Quarterly EBTIDA Margins EBITDA Margins (%) Mexico Europe 9 15.2 15.2 14.6 14.6 6.6 6.8 6.9 13.9 15.0 13.9 11.4 11.4 13.8 5.4 11.2 11.1 13.3 14.5 13.7 5.5 6.4 6.8 12.4 4.2 10.7 13.0 13.2 4.4 4.9 11 10.8 11.1 3.9 1.6 12.4 10.3 10.2 10.3 2.0 2.3 10.7 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 9.4 9.2 US Latam 18.7 11
Slide 31: Quarterly EBITDA Margins
36 Quarterly EBTIDA Margins EBITDA Margins (%) EBITDA Margins (%) 14.6 15.0 15.2 13.7 13.2 13.1 13.0 12.4 11.0 11.0 12.7 10.8 10.5 11.2 11.4 9.1 9.5 10.5 9.5 10.7 10.2 9.0 8.7 9.4 9.2 7.8 8.1 8.5 6.6 8.0 5.4 4.9 2.0 2.3 1.6 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Sigma
Slide 32: Change in Net Debt
37 Change in Net Debt Change in Net Debt 3Q22 vs 2Q22 (US $ Million) 2Q22 EBITDA NWC CAPEX Net Financial Expenses Taxes Dividends Other 3Q22 Sources
Slide 33: Capital Expenditures (Capex)
38 Capital Expenditures (Capex) Capex Mexico Europe 67% 63% 68% 76% 82% 70% 86% 78% 33% 37% 32% 24% 30% 18% 14% 22% 73% 78% 75% 72% 2019 2020 2021 YTD 2019 2020 2021 YTD U.S. Latam 22% 25% 28% 27% 55% 89% 78% 85% 85% 67% 89% 100% 2019 2020 2021 YTD 45% 33% 11% 22% 15% 15% 11% Strategic Maintenance 2
Slide 34: Financial Results
Financial Results US $ Million Volume Revenue EBITDA (K Tons) (US $ Million) (US $ Million) 7,228 160 741 1,720 1,754 1,701 6,463 6,817 703 684 686 1,678 1,756 1,705 1,739 6,336 6,347 663 676 684 1,668 5,901 6,054 639 716 5,698 1,445 5,359 525 1,304 470 1,142 3,820 1,105 3,443 395 897 3,308 308 2,61
Slide 35: Credit Ratings & Leverage Ratios
Credit Ratings & Leverage Ratios Baa3 (OS) BBB (OS) BBB- (OP)* Net Debt Net Debt / EBITDA** Gross Debt / EBITDA** 1,936 1,859 1,994 2.9x 3.8x 1,756 1,691 1,708 2.7x 2.8x 2.6x 3.6x 3.6x 3.8x 3.4x 3.5x 2.3x 2.5x 2017 2018 2019 2020 2021 3Q22 2017 2018 2019 2020 2021 3Q22 2017 2018 2019 2020 2021 3Q22
Slide 36: Debt Profile
Debt Profile Average life: 3.4 years Average rate: 4.67 % (including CCS) Debt Maturity Schedule (US $Million) Debt Mix Cash Mix 1,000 (Including CCS) *220 8% 26% 26% 699 588 500 57% 17% 66% 172 Cash 2022 2023 2024 2025 2026 2027 2028 MXN USD EUR OTHER *US $220 million MXN-USD Cross Currency Swap (C
Slide 37: Dividends
Dividends Paid Dividends (US $ Million) 155 150 151 Amount Quarter 120 (US $ Million) 1Q22 $76 76 2Q21 0 3Q21 0 4Q21 - 17 18 19 20 21 22 * In 2020 no dividends were paid. The graph shows the approved amounts for each year.
Slide 38: Income Statement
Income Statement (Thousands of pesos) (Thousands of U.S. Dollars) III Quarter 22 III Quarter 21 III Quarter 22 III Quarter 21 Revenue 38,025,114 34,592,374 1,878,911 1,728,883 Cost of sales (28,642,644) (25,250,382) (1,415,354) (1,261,979) Gross profit 9,382,470 9,341,992 463,557 466,904 Selling exp
Slide 39: Balance Sheet
Balance Sheet (Thousands of U.S. (Thousands of pesos) Dollars) (Thousands of U.S. (Thousands of pesos) Dollars) Sep '22 Sep '21 Sep '22 (1) Sep '21 (2) Sep '22 Sep '21 Sep '22 (1) Sep '21 (2) LIABILITIES AND STOCKHOLDERS' EQUITY ASSETS CURRENT LIABILITIES: Accrued interest payable 611,777 649,611 30
Slide 40: Cash Flow
Cash Flow (Thousands of pesos) (Thousands of U.S. Dollars) III Quarter 22 III Quarter 21 III Quarter 22 III Quarter 21 CASH FLOW FROM OPERATING ACTIVITIES Profit before income tax 1,586,239 1,852,018 78,281 92,568 Depreciation and amortization 1,013,042 1,109,371 50,059 55,444 Impairment of fixed as
Slide 41: 2022 Revised Guidance
2022 Revised Guidance (US $Million) Revenues $7,100 EBITDA $700* Capex $290 47 * Initial EBTIDA Guidance was $760M and was revised in the 2Q22, Revenues and Capex were not changed
Slide 42: Meat Raw materials – Pork and Poultry
- 2020 Meat Raw materials – Pork and Poultry - 2021 - 2022 U.S. Europe USD / Lb Eur / kg Pork Ham Chicken MSC Turkey Breast Pork Ham 1.5 0.8 8 3.30 0.6 6 2.80 1 0.4 4 0.5 2.30 0.2 2 0 0 0 1.80 J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O J A J O Pork 42% Tu
Slide 43: Meat Raw Materials – Dairy
Meat Raw Materials – Dairy U.S. USD / Lb Milk Class III Block Cheddar Cheese 3 30 20 2 10 1 0 0 J A J O J A J O J A J O J A J O J A J O J A J O NFDM 2 1.5 - 2020 1 - 2021 0.5 - 2022 0 J A J O J A J O J A J O Sources: U.S. - USDA; See Appendix A for additional information regarding U.S. raw material
Slide 44: European energy utility price reference
European energy utility price reference Dutch TTF 400 €/MWh 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 200 market 150 100 50 0 J F M A M J J A S O N D 2020 2021 2022 Sources: ICE Ind
Slide 45: Content
Content 01 Sigma at Glance 02 Into the Future 03 Financial Performance 04 ESG
Slide 46: Sigma´s ESG journey
⁻ Signed the SBT Commitment Letter ⁻ Well-Below 2°C objectives in validation process Sigma´s ESG journey 2022 2025 ⁻ Initiative to increase ESG communication ⁻ ESG Ratings improvement roadmap 2021 ⁻ Sustainability report reviewed by GRI Joined: ⁻ United Nations Global Compact ⁻ CDP Supply Chain Prog
Slide 47: Sustainability Strategy: 4 pillars of Actions
Sustainability Strategy 4 pillars of Actions Aligned with the UN Sustainable Development Goals 260+ employees involved Wellbeing Health & Nutrition Shared Value Enviromental We commit to establishing conditions We promote healthy lifestyles through our We create economic and social value We focus on
Slide 48: Sustainability Community
Sustainability Community 260+ employees involved Chief Research, Innovation, and Central Sustainability Team ESG Champions Business Units Sustainability Officer • Lead and authorize Strategic • Develop the Sustainability Strategy. • Topic-specific experts for each • Execute ESG roadmaps locally guid
Slide 49: 2025 Sustainability Commitments
2025 Sustainability Commitments
Slide 50: Current ESG Memberships and Partnerships
Current ESG Memberships and Partnerships United Nations Responsible Sourcing Supply Chain Carbon Emission Aligned with the Signed SBTi Global Compact Assessment Program Program Reduction Program United Nation SDGs Commitment letter Confidential Public Information Information
Slide 51: 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 52: USA – USDA PM Ham, 23-27# Trmd Sel Ham
USA – USDA PM Ham, 23-27# Trmd Sel Ham 7 2 3 8 4 5 1 9 6 10 Pop − up 12 11
Slide 53: USA – USDA Pork Trimmings - 42% Trim Combo, FOB Plant
USA – USDA Pork Trimmings - 42% Trim Combo, FOB Plant 7 2 3 4 8 5 9 1 6 10 Pop − up 11 12
Slide 54: USA – USDA Chicken - MSC, 15-20% Fat, Fresh
USA – USDA Chicken - MSC, 15-20% Fat, Fresh
Slide 55: USA – USDA Turkey - MST, Some skin, under 20% fat, Fresh
USA – USDA Turkey - MST, Some skin, under 20% fat, Fresh 2 3 4 1
Slide 56: USA – USDA Turkey - Breast, Young Tom, Boneless & Skinless, Fresh
USA – USDA Turkey - Breast, Young Tom, Boneless & Skinless, Fresh 2 3 4 1
Slide 57: USA – USDA Turkey - Thigh Meat, Boneless & Skinless, Fresh
USA – USDA Turkey - Thigh Meat, Boneless & Skinless, Fresh 2 3 1 4
Slide 58: USA – USDA Dairy - CME, Milk Class III
USA – USDA Dairy - CME, Milk Class III 2 1
Slide 59: USA – USDA Dairy - Block Cheddar Cheese 40lb
USA – USDA Dairy - Block Cheddar Cheese 40lb 1 2
Slide 60: www.sigma-alimentos.com
www.sigma-alimentos.com CORPORATE PRESENTATION Contact: investorrelations@sigma-alimentos.com