IBA - Earnings call transcript Q1 2022 | Industrias Bachoco, S.A.B. de C.V.

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Operator

Good morning. My name is Hilda and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2022 Industrias Bachoco Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. attention. your for you Thank I will to Jaquez. call turn the over Maria now may you begin. Maria,

Maria Jaquez

morning, Bachoco’s the Thank conference welcome you. and Good to released financials call. our first today open. before market We XXXX quarter

or from that forward-looking new undertakes information contains The a Except no regarding need including on anticipated applicable or forward-looking beliefs XX-F, available Relations the those discussed release, our Bachoco our of If are in statements Report, that are current as not uncertainties, revise update or request law, any earnings our could or Industrias based you as information, and estimates result from which call copy future Annual to whether it subject described This could required in statements performance. and reflect materially information and please current management’s by events the forward-looking obligation of are this currently risks visit of and statements website certain otherwise. performance future call. publicly department. a our based make considered statements, Investor be events, our assumptions on to differ guarantees and results

with conference of the will the for unless Pesos. in in Lastly, of XXXX otherwise Mexican amounts period mentioned comparative XXXX be indicated, this figures figures same

per – a As XX, March reference, the exchange U.S. dollar. Mex$XX.XX of was Mex$XX.XX rates XXXX, as

Daniel are me, Salazar. Mr. with our Here CFO, Ramos; CEO, Rodolfo our Mr. and

call to the Ramos. give will I Now, Mr.

Rodolfo Ramos

Thank you, morning, Maria, and good everyone.

in on of increasing that was versus to corn that better and period to which we which XXXX. The XX% conditions. allowed negative can has control, markets, things full the challenges us related our compete kept sales regard, of of particularly soybean first of cost quarter working we In by those under same the the impact and it year meal uncertainties, a

Mexican of operational team attracting our operating focused with our market of efficiencies share, diligently been results Alimentos. U.S. It shortages impact efficiencies, In worked improvement, or and on of During regard, team. to were sales looking competitive In terms we RYC worth – to highlight the are for it were retaining the operational we to mix integration in is the in you quarter, key very negative this talent. the this constantly very operation, our while level. we This we increasing bring on of our our share us and geography. for back has facilities labor XXXX, opportunities

the and a consider that heading are of room toward still we are for While right there a we is direction. certain improvement, we

net Mexico in of the of portfolio terms first we but centers segment also dedicated Tlaxcala. production and not as well Veracruz our as of Oaxaca, but located to of stores. multi-protein approximately only the our In mix. the state United With entering in good quarter levels Mexico, acquisition, owned States XXXX are with in marketing adding and XX Puebla, we value, processing of observe properly the the stores Puebla, higher product a across RYC integrated and Alimentos to to this we sales pricing This is also not company only both

the same when period end, was looking committed a $XXX.X the not million in and quarter end, strategy. sales. cost compared the our are the the was that total to of to the we mention a XX.X% implementing of that XX.X% At which about for identified the In of first XXXX. in We EBITDA $XXX.X world actions to increased release, which CapEx sales XX.X% At and XXXX, the which as to reported the of increase early reporter they of forward in XXXX of our first result compared this that to synergies XXXX. XX.X% press quarter our in remain to pressure – captures quarter, in quarter enough margin, first early compared million we of offset for the our

our We while plans this the we are us certain of facing market are and uncertainties point that our volatility which the financial to supporting to discipline in would and growth predict. compete. operating allow At difficult continue

Daniel results. for a join discussion Now, will of us financial the

Daniel Salazar

Thank you, morning, Rodolfo, and everyone. good

total the of to As XX%. combination profit $XX,XXX.X of with gross margin sales mentioned of of in to a SG&A resulted sales first of of when cost million, than gross XXXX. the representing quarter was quarter XX.X% conditions profit our period million Mex$XX,XXX.X XXXX The Rodolfo first of company’s compared This XXXX was of the margin period XX.X% million compares report million higher result compares XX.X% million achieved $X,XXX of $X,XXX.X first first for margin the of in a in the same XXXX. representing quarter gross an net in XX.X% of sales Operating XXXX. the of same with quarter XX.X% the of total to was quarter compared sales, $X,XXX.X The in of $XX,XXX $X,XXX.X the $X,XXX.X a before, of or for and the which same of the XXXX. quarter mentioned million, increase the period reported in and total X.X% total the million the quarter risk X.X% Total a XXXX.

the XX.X% XXXX. for compared when in was XX.X% the quarter quarter margin with and first increase the EBITDA of Our

versus quarter, of Mexican million income the For same of dollar was the of $XXX.X quarters the of a we for the result net compared of net first XXXX. end XXXX. the expenses U.S. the the financial period financial This of a to million the $XXX.X peso at had revelation

for million net were of million for same XXX.X XXXX. us in the to XXXX. quarter, in of to for for X.X% quarter the taxes first Mex$X.XX same quarter the was margin of to quarter than XXX.X margin recognized compared the slightly XX.X% Mex$X.XX reporter the the the XXXX. the quarter of per led net total and income income XXXX, in net the million lower period million X,XXX Our share above of compared All The an X,XXX.X the resulting first a

the compared Part related we when pain for I the per of our asset. of the dividend XXX.X company per all had the announced Alimentos first In amount one-day and Meeting Our to million, call XXXX to is the Mex$XX.XX back in XXXX. now RYC final last million to XXX.X increased the Rodolfo. Shareholders That’s in the Annual ADR. and integration return increase this of of CapEx or and quarter cash of thank Mex$X.XX you, remarks share will was

Rodolfo Ramos

Thank you, Daniel.

quarter commodities the uncertain As of we remain. second in market condition enter the

through been sales mix efficiencies, and that pricing strategy, impact U.S. we So operating market. far both have our of hedge able offset to the and Mexican in part the negative in

point our that we and for food better volatile road to of that able space will aware reduced. However, questions. will certainties regard your under are take our strategy operating be With at be we hedging related our discipline under to some In not now financial landscape. that will be industry, that the a to a only benefits profitability key but with

Operator

Thank Instructions] you. [Operator Luis question GBM. from We Willard have a from

Luis Willard

hear Good question. Daniel. Can morning, you me? for level for taking thanks my High

Daniel Salazar

Yes

Rodolfo Ramos

ahead. go Yes,

Luis Willard

Perfect. Thank you.

question. the for you thank So

mentioned the difficult business continue business. CapEx And you inflation, So it I nice in current the this quite see, circumstances: made was to see prospects. to for commodities, investors mean it ramp-up remarks cetera growing your certainly you long-term to as et to have really the short-term hear

So you long-term Bachoco’s view? for changed profitability potential can and with anything how see do has us, growth you the and share the

Daniel Salazar

market the what Well, have commodity very is in been it’s happen to in we predict volatility that future seen to huge. the has complicated going because the been

commodities. So in very between it’s market, But to those going I’ve terms how – of of the it been stability is terms seeing the be balance difficult the in and offer. predict demand to

problem to give predict the the pricing. color The can that cost. is some So about us

So materials, pricing is but I to the I how new be really grains feature. mainly in the soybeans the can going tell know be and you going raw strong, it’s to don’t that

Luis Willard

Correct.

So, yes, yourselves GDP of seeing your the we especially and growth? but the complicated, is margins maybe and faster than the faster EBITDA you industry be I are long-term, to than growth even thinking see mean, do short-term what

Rodolfo Ramos

expecting the are translate we going long-term the to pricing. Well had cost to to we cost past. those to increases the able be All maintain those close to very mid-terms our in that in are the in cost, we in EBITDA what the

seeing So EBITDA. regards normalized in we are that

Luis Willard

That you, Rodolfo. was Thank great.

Rodolfo Ramos

Thank you.

Operator

Thank you.

next Our question comes from from Ponce Bradesco BBI. Juan

Juan Ponce

taking you question. my Rodolfo, for thank Daniel, Hi

in you have led the control impact which We actively seen from pressure, pressure really to future growth. we impacted expect the near what and Do pass to or the line how the challenging Bachoco? very any it could cost and being plant inflation down this demand top environment you see should strong is

Rodolfo Ramos

chicken. higher cheapest at with obviously advantage can the the moment Chicken prices the with but be – protein. the Well, reduced, is is demand

the the in of protein baby this on supply a the seeing we very demand to the maintain future. to States a availability expecting the hatchability mainly breeders are it checks. even causing we meat in of So find And because reduction that’s of in and United new tight the are

the is be So be tight. going is going The market tighter. to supply to

problem results tell have the not are normalized we we demand, with margins. between balance us expecting that the So and can offer which of in can terms

Juan Ponce

Got much. you it. very Thank

Operator

you. Thank

Ulises from next Our from JPMorgan. comes Argote question

Ulises Argote

questions. on days my this for so coil. of think I the one flu new of was first couple I the of I my slower think ago, Thanks A guess. couple from here outbreak squeezing bird side, the in state there

have should kind mining there – So terms you we that been commenting? that were supply of have we that in that – of anything that output precisely you are relevant should

Rodolfo Ramos

some our of order biosecurity area. At we now all but outbreak aware now been are if any of and problem can right challenge be that Right sampling be area. this have in prevent we this it’s just there, we a measures around Well, have there now to state in moment have we negative, right big just farms the but the in in in any our order that type of problem. to are results knowledge [indiscernible] farms

know, are farms footprint country. our not so in with exposed our the because all is you as We

country supply this have moment every of have geography states. farms every at is from egg coming location, our We around XX% in the and we into the in hatching

of moment even comfortable in we the with our in sourcing this our eggs hatching to at states. Mexico, production feel So maintain very

Ulises Argote

announce that on one, that’s controlling items the then obviously previous that to the the the Okay. maybe been to on Checking Thank of on has government plan there inflation. a that basket – that is on you. that Super has follow-up to been That’s helpful. question previous – products. set of one named yes, super. other the And

you that So of us that, anything in share can would well? that as terms expectations very helpful be with any

Rodolfo Ramos

us. those but They those and beef and is XX diesel taxes some reduction program there’s help the They control, the to improve is there’s which XX and they is others of including is not trying government to in are important. on Those going very goods, inflation, the for XX be and of goods. of be is goods efficiencies gasoline the the and some parts – include there price said the transportation establish to among are eggs, the the chicken products, control And Yes. to products some among affect the the a there’s actions to whole going pork. distribution

So and there’s cost transportation to in working they market. order of traditional the sales the then in are the – areas reduce retails in products or the the and some traditional the margins the cost, reduce

through this But are to week presenting and long-term be action, not are there’s can going increase program which of are effect some be in to is – a not is domestic effect to corn, they case, action a immediately, – not to the So the is see next going the good. the there to announced, is it’s us what follow SAGARPAs a very the that to They it’s very there’s they be be which work. actions here. going production but a good, meeting going

in close initiative in our very of are are we what can best to see going order we And be to to inflation do terms do? So going we to this control.

Ulises Argote

timeline acquisition there. the final provide a Okay. of on updates one, just weeks the announced updated maybe that or No, Thank that that, you couple Thank that that the was any perfect. can share so details And much you back. for is for of any you.

Rodolfo Ramos

Daniel? Well,

Daniel Salazar

announcement guys. this we have the will that once share At what course of have with we all Ulises. any No, don’t information a you we we additional point, additional provide information part of

Ulises Argote

Okay, very much. perfect. you Thank

Daniel Salazar

Thank you.

Operator

Thank you.

next Santander. from question Alan from Our Alanis comes

Alan Alanis

a public to scenarios an taking for the and congratulations previous room, results, morning much question. so in of, follow-up impressive there’s the you Good right? the be question for I Thank in terms months. want not might elephant on pretty talking operations the company that in my We’re a I on results. about mean, regarding few

making not I this in stocks So results mean, where the moving.

frame how timing in that affect the – way potential what company guess, what and operations from the and tender the of is the the not I are are does the the future? the offer what scenarios it majority question the So foreseeable to for shareholders or

Daniel Salazar

We that the neither the into But file way, haven’t when had you company. Alan, information can have same additional operation make that the in is companies share answer we don’t and operating what the cannot the additional question, because family we with the we we the in will changes of foresee any authorities.

the So on for usually results focused we giving the very of we – working have are as delivered and on company.

any we have additional information. So point, at this don’t

Alan Alanis

Daniel. that’s And very it. Got useful already,

would made will just has what receive – that a what’s of So that offer. filing How the by a right, notice basically whole of next? will to call catalyst already a procedure – get the tender is made you timing the by evolves, The I the Board has mean, long I price there. mean, the triggered official this tender that sense take? Mex$XX. the I meeting? if family. this public, shareholder’s makes for happens once and offer family of almost Then the this an been the when filing this want how filing, does family

Daniel Salazar

thing once as should an rise. days, But Board the opinion of at the offer, the following authorized company know as family, natural. that will in the this said offer It’s Well, in XX the the price as do. that the once company I authorities company once the on far the is have Board company give the only the is process before, to the I tender

an is this So externality us for actually.

Alan Alanis

is they’ll something family give but not an you. have reasons, or of to situation the for And files the then any a Yes, to whole because the closer you mean, you’re better, opinion. but unfair if, meeting, Board give basically management among then to when not and If that shareholder’s understood, us, this understand they shareholders, will and to the fair it’s understood. basically, right? an think to just to go their I

Rodolfo Ramos

Yes.

Alan Alanis

Got Okay. it.

I mind again, which in and Well what with you. other congratulations of process, on think okay. luck everybody’s price now the that’s stock any best Now, results controlling and right Thank of the the it’s case.

Rodolfo Ramos

Alan. Thank you,

Daniel Salazar

Alan. you, Thank

Operator

Jay [Operator The Browne. question next Tweedy, Hill Instructions] from you. from Thank comes

Jay Hill

Hi, Daniel. Hi, Rodolfo. Good morning.

Rodolfo Ramos

Good morning.

Daniel Salazar

morning. Good

Jay Hill

Guys.

this I a hypothetical the of shareholders, you want context to proposed the by in ask So tender question. offer controlling

hypothetically, pesos chicken how offered So of CEO if on and fairness advise offer the of other the if, all the XXX% some team a Bachoco, to as want or would I Tyson’s price. the of million buyer strategic Mex$XX.X the per share CFO hypothetical Board know you shares, that for management XXX

Rodolfo Ramos

I hypothetical answer opinion the Jay, can answer offer. give an hypothetical company have cannot you an an this hypothetical. tender any cannot for question. to, I Actually, in

it to answer is – to So is this unfair that question. try

Jay Hill

billion it’s even now look, price Mex$XX.XX per mean, value. basically share below Mex$XX of mean Mex$XX is is book The tender book offer I now per Daniel, value Well, I share.

of non-conflicted that make you And within to So, entire tender the to that four on fairness, that are offer. that can is are tell point. XX days, the Board independent so it when fairness the opine offer fairness Is the the to you or are members offer formal I documents only the Board the opine of it opine the going going Daniel, of directors on XX is then, price? said all the to me, on going come, want

Daniel Salazar

that completely the the Board opinion as on I independent. shared the far that that one directors should is As I based know

the… So

Jay Hill

one the opining expect the on of independent directors directors will the the price. the you just fairness So be four independent would

Daniel Salazar

right. right. That’s That’s

Jay Hill

you terrific behalf mean, other I put I to acquisitions that, Shoko EBITDA, to fulfill have shareholder the evaluate guess relative companies fiduciary look directors sales, similar guys others a you EV negotiating but all that you of of to and and And the that on at price of of counting tell precedent, EV independent all transactions a I just Okay. I final EBITDA, book, EV looks point, the and this to extremely if low on tender of to offer the normalized situation. mergers similar the price controlling can the you minority shareholders their together to I and we’re course guess think price the in with shareholder to here results as so duty are

Daniel Salazar

to far independent on an foreigners this cannot I to with negotiate up is have answer them that to opinion not as and I tender the that only the duty it’s know the investment the of to any bright analyze. offer but community Jay, as director

Jay Hill

Yes, going Investment hire proper would value…. completely with fairness the a to they opine Independent the do that Bank of are independent directors to appraisal

Daniel Salazar

should think Yes, I way. do they that

Jay Hill

Okay, terrific. I Daniel. you, appreciate it. Thank

Daniel Salazar

Jay. you, Thank

Rodolfo Ramos

you, Jay. Thank

Operator

Thank you.

from [ph] next comes VN Capital Don Noone Our Management. from question

Unidentified Analyst

morning or gentlemen. good good Hi, afternoon

time a point, or of we already board follow a Just can to think not to currently up clearly on around can financial last give because XX opinion the is there’s guess them so tender assume directors opinion hired and fairness I by receive a institution institution financial that retained don’t that to a the the turn we days independent have independent offer directors. assume I fairness

Daniel Salazar

Well in to offer. the they the think. for next have will tender else cure filing because the I what at find or electorate. will This months someone I terms filing This know is once can family according a two I say more take members answer probably out weeks of tries don’t a cannot started least I authorities question with to the But taking if that that for

Unidentified Analyst

long. take Okay it’s real not XX is days to the a so number going really

Daniel Salazar

I authorized offer filing to the the analyzing started tender. documentation authorities because family haven’t the the as month XX the order day more tender than approve the in the So authority if will the a take I mentioned but Yes once start

at it take in two So the will place or month next least. months

Unidentified Analyst

thank you. Okay

Daniel Salazar

Thank you.

Rodolfo Ramos

Thank you, Don.

Operator

this have would I questions. moment Thank you. Ramos like further for remarks. closing to no Instructions] to Mr. turn [Operator At we call over the

Rodolfo Ramos

us Okay all thank for you this morning. joining

be to If Investor further please assist very have area, will contact glad questions Thank any who everyone. our you Relations you. you much

Operator

We concludes participating. you This today’s conference you. for Thank call. thank

disconnect. may You now

Industrias Bachoco, S.A.B. de C.V. (IDBHF) 29 Apr 222022 Q1 Earnings call transcript