Sigma Foods, S.A.B. de C.V.

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00:30 Thank you, Alex. Good afternoon, everyone, and welcome to ALFA's Third Quarter Twenty Twenty One Earnings Conference Call.

Additional details about our quarterly results can be found in our press release which was distributed yesterday afternoon together with a summarized presentation. Both are available on our website in the Investor Relations section.

00:54 Let me remind you that during this call, we will share forward-looking information and statements, which are based on variables and assumptions that are uncertain at this time. These uncertainties include, but are not limited to ongoing risks related to the impact of COVID-19.

01:13 It is my pleasure to participate in today's call together with Eduardo Escalante, ALFA's CFO; Carlos Jimenez, ALFA's Senior VP of Legal and Corporate Affairs; Roberto Olivares, Sigma's CFO and representatives from each ALFA company. 01:35 I will now turn the call over to Eduardo.

1:40 Thank you, Hernán. Good afternoon, everyone.

I hope you and your loved ones are remaining safe and healthy. Third quarter results for positive expectations with double digit top line and EBITDA growth despite the complex operating environment.

As a result, annual EBITDA is trending ahead [Indiscernible] full year guidance. Importantly, we continue to advance on the three key directive that we made out as part of our unlocking value strategy.

Let me begin by sharing a few insights on the latest developments for each of them. 02:21 Is starting with reducing leverage.

Twenty twenty one was the third consecutive quarter of sequential leverage reduction. Our net leverage ratio decreased to two point five times at quarter end, the best levels in three years.

This good performance was mainly driven by Alpek, which reported a low ratio of one point two times. We are firmly committed to further leverage reduction to strategic initiatives.

The Axtel team is actively engaged in negotiations with potential investors. As a transaction would be a significant contributor to accelerate the leverage.

Unfortunately, we cannot provide further comments at this time given that conversations are ongoing. At the same time, ALFA is evaluating additional alternatives to continue, with this orderly transformation process in any scenario.

03:27 Next, focus on core businesses. Alpek, Sigma, and Axtel continued driving business specific initiatives that boost their own underlying value while our transformation process is completed.

On this matter, I would like to highlight project evergreen implemented by Alpek to enhance its ESG strategy. During the third quarter, the company completed the first phase of this engagement, involving a deeply analytical review that resulted in specific targets for a strong material issues as well as the corresponding action plans.

For example, in terms of carbon emissions and an equal efficiency, Alpek is committed to the paris agreement. Twenty seven point five percent reduction in Scope 1 and 2 emissions by twenty thirty.

And Carbon neutrality by twenty fifty. We invite you all to review the food set of target at Alpek’s website.

04:43 Encouraging business independent is the third directive. We celebrate the merger of Nemak and Controladora Nemak.

For us, this event marks the successful completion of a multi stage process that initiated with the announcement of ALFA’s and loading value strategy a little more than one year ago. Moreover, ALFA’s corporate headcount is down fourteen percent year-to-date.

This is primarily driven by the gradual transfer personnel to our subsidiaries, which is an important part of our efforts to support their service related independent from ALFA. 05:29 On a separate manner related to shareholder value.

Last quarter we announced that we successfully expanded the Maximum Nafinsa Trust Threshold to seventy five percent of ALFA shares outstanding. Based on figures from fee sharing for any investors scale forty nine point three percent of outstanding ALFA shares at the close of September twenty twenty one.

05:58 The approved threshold of seventy five percent provides ample room for foreign investors to continue investing in ALFA. Following this announcement, we were happy to see an update issue by [Indiscernible] increasing the number of alpha shares in this indexes effective at the close of September seventieth.

We have also actively engaged when with MCSI providing them complementary information to restore ALFA conclusion in their indexes as soon as possible. 06:42 Moving next to a brief discussion of the third quarter results.

ALFA once again, demonstrated it’s ability to adapt and delivered solid growth. 3Q twenty one net sales were three point ninety seven billion up thirty percent year-over-year and seven percent quarter on quarter.

These represented a fifth consecutive quarter of sequential revenue growth. This strong performance was primarily driven by higher average prices of Alpek.

Additionally, Sigma reported record revenues thanks to a better than expected recovery in the foodservice channel is to managed to inflationary pressures. 07:33 On consolidated EBITDA increased eleven percent to four eighty six million dollars driven by a strong results Alpek.

These results contributed to a thirty six percent year-over-year increase in accumulated EBITDA to a record one point five billion dollars. Adjusting for extraordinary items, primarily, noncash inventory gains and carry forward affects at Alpek comparable EBITDA in the quarter was four forty million dollars up twenty one percent versus twenty twenty boosted by its fifty two percent gain at Alpek.

08:21 I will now turn the call over to Roberto Olivares Sigma CFO to discuss the company's third quarter results and some progress on strategic initiatives in more detail. Please Roberto.

08:35 Thank you, Eduardo, and good afternoon everyone. On the business update, I will offer an overview of our operational and financial results as well as comment on recent developments related to the profitability improvement plan.

For our European operations that will take us one step closer to double digit EBITDA margin in this region. During the third quarter, Sigma achieved record consolidated revenues of one point seven billion dollars, ten percent above year-over-year driven by comprehensive revenue management initiatives and meet inflationary cost pressures in the U.

S. Mexico and Latin America.

09:18 The record consolidated revenues were also driven by resilient volumes due to a strong consumer preference for our products and the appreciation of the Mexican peso. In local currency, revenues were five percent above year-on-year.

Following high single digit average price increases in Mexico, the U. S.

And Latin America. 09:44 In Europe, average prices were flat in local currency and meet lower pork prices in the region.

EBITDA reached one hundred and seventy six million dollars, a two percent decrease year-on-year mainly due to inflationary pressures in the Americas and a decrease in European for exports to China. Results were partially offset by a solid operating performance in Mexico and Latin America.

Where the pricing actions are reflected more quickly. 10:19 In local currency, consolidated EBITDA decreased seven percent when compared to twenty twenty.

Sigma will continue to implement pricing actions to mitigate the impact of higher raw material costs. The timeframe of these actions may vary by and Channel and thus generates temporary margin pressures.

10:44 As of the end of the third quarter, our pricing actions have allow us to mitigate most of raw material cost increases. And additional negotiated price increases will be reflected during the fourth quarter.

The food service and convenience channels continue to recover despite a recent search in COVID-19 cases. Foodservice revenues increased eleven percent sequentially, fifty five percent year-on-year and only eight percent below pre-pandemic levels.

Meanwhile, foodservice EBITDA increased six percent sequentially, has increased nine times year-on-year, and is eleven percent higher versus pre-pandemic levels. 11:32 The foodservice margin expansion is the result of successfully implemented tangible cost and expense saving initiatives.

The consolidated EBITDA margin decreased to ten point two percent during the quarter. However, due-to-date EBITDA margin as of twenty twenty one, reached ten point seven percent.

11:55 Throughout twenty twenty one, Sigma has faced industry wide challenges that were resulted in a complex operational environment. However, our teams haven't leveraged the company's global sourcing capabilities to overcome supply chain challenges and have taken better driven pricing actions aim to mitigate inflationary pressures.

At the same time, we have maintained our focus on building long-term relationships with suppliers, sustaining client service levels and meeting customer demand. 12:30 Despite the challenging third quarter, due-to-date revenues and EBITDA are on track with our guidance.

Nonetheless, even during challenging times, we remain on the lookout for new opportunities to innovate and continue strengthening our product offering to maintain consumer preference and faster growth. Therefore, I am proud to announce that during the quarter, our growth business unit launched, Sigma’s first global plant based brand, better balance, which offer healthcare and base care plant based reductions.

Better balanced products are currently in a pilot space in [Indiscernible] restaurants in their European, U. S.

And Mexican markets. 13:20 Finally, I will comment on recent developments regarding our comprehensive plan to improve profitability in the European operations and which double digit EBITDA margin in the region.

More than seven years ago, Sigma expanded its operations to Belgium and the Netherlands with the acquisition of temporary three year food group. As part of our transformation process, to continue facing profitability and growth at Sigma and after excessive analysis, we accepted an offer from the direct group to acquire these operations in Belgium and the Netherlands, subject to clearance by competition authorities and local employees consultation rights.

14:04 The transaction includes six production facilities and pipelines. Tax reference, these operations and brands represented approximately one percent of our consolidated EBITDA in twenty twenty.

This decision will consolidate our operations and allow us to focus on our leadership position in the core European markets. Where we will continue to offer nutritious and quality foods that characterize us.

14:38 At this time, I would like to take a moment to thank all of our colleagues for the great sense of responsibility and team work. Two times of uncertainty and despite the challenges, their dedication and resilience has made it possible to continue bring communities to everywhere favorite food still.

14:57 Thank you for your attention. I will now turn the call back to Eduardo for additional comments and closing remarks.

15:06 Thank you, Roberto. To end our prepared remarks, we will provide a brief update on guidance.

Alpek continues to be an outstanding performer this year, delivering record EBITDA levels. As a result, the company increases guidance again supported by ongoing strong margins.

Year-to-date, Sigma still are in line with previous EBITDA estimates. 15:35 In turn, ALFA’s consolidated twenty twenty one EBITDA guidance increases to one point nine three seven billion dollars or ten percent from one point seven six seven billion previously.

Summing up, since mid-twenty twenty, we have been driving some additional changes across our business. And we are very pleased with the progress so far towards our financial operation and strategy goals.

This has been a dedicated effort across our entire organization, and I want to thank every member for your hardwork. We are exiting twenty twenty one on very strong strong footing and remain firmly committed to continue building sustainable value for stakeholders.

16:28 This concludes my remarks. We are now available to take your questions.

Please, Hernán.

16:35 Thank you. We would like to begin the Q&A session with questions on ALFA.

Eduardo, Carlos and I will take questions on ALFA or corporate matters. Alex, please instruct participants to queue for questions on ALFA.

17:34 Hi thank you. My question is regarding the corporate expenses that you foresee for twenty twenty two, do you expect to be able to achieve further efficiencies, reductions in corporate expenses, independent of what happens with a subsidiaries and I guess if you could give us an update on the process of divestment external or parts of it?

Thank you.

18:05 Sure. Thank you for the questions Vanessa.

Regarding corporate expenses, we think this we are going to close this year around probably mid 40s in terms of million dollars. We expect that we have a level similar last year probably slightly below that but similar level.

But if you compare that with twenty nineteen, we would be about nineteen percent below pre-pandemic levels. Of course, some expenses, we didn't incur last year since we were working from home.

And now we have seen little increased versus last year in those line items. But overall, we are very happy to be somewhat much below pre-pandemic levels.

19:13 Regarding your second question about that scale, what I can tell you is that conversations continue, we still feel that infrastructure business unit remains very appealing to invest towards us as they have shown us in these process. And also in the case of the service business unit, opportunities in mobile and digital transformation solutions are also very attractive for them.

19:48 Certainly, it has been a challenge to be able to close the transaction regarding Axtel has taken off a long time. But we continue pursuing a transaction that allows us – that would allow us to accomplished the objective of value maximization for shareholders in Axtel.

It is a priority of us. We will continue working to towards that goal.

As I mentioned before, we cannot provide you specific update since we have ongoing negotiations at this time.

20:30 Great. Great, Eduardo, so just to clarify for twenty twenty two, you expect similar corporate expenses than in twenty twenty one correct?

20:42 They are going to be below, Vanessa we still don't have a number but since we as I mentioned, we have a fourteen percent reduction in terms of personnel, that we are transferring to be subsidiaries. We think there is going to be a further reduction from this year.

21:03 Okay, that's great. Thank you.

21:05 You're welcome.

21:16 Thank you. Good morning, everyone.

Good afternoon. My question is on this on the farther end of this unlocking value initiative of yours and just to want to get your thoughts on obviously Alpek has been performing very strongly.

And I just want to understand how does this strong performance that we seen so far play out in your mind as to the potential spinning of the subsidiary and any color on the timeline? I mean consuming the tax implications that it could have.

Thank you.

21:58 Sure. Sure.

Thanks. Thanks for the question.

Let me start by say – start by saying that we are – we continue to be committed to move forward with the strategy that we laid out. Alternatives for the path forward, I really subject to the determination of the potential Axtel transaction.

However, at this time, we feel confident that in addition to the Axtel transaction, we do have several alternatives on the table. Some of them we have this discussed before are very obvious.

We have some real estate assets at the corporate level, we have forty acres of prime real estate in monterrey and some more non-strategic assets. And as you already mentioned, the positive results of a strong balance sheet at Alpek, and I will also add a Sigma open up several of opportunities it for ALFA.

23:13 Alpek being at one point two times and Sigma being up two point four times that allows us a flexibility in terms of options, which are being look and analyzed by our board of directors and they want the decide on the best way to proceed in order to make the recommendation to our shareholders. That's what we stand today.

We do not have a timeline. 23:43 We do not have and specific time goal to move forward with the process.

We will pursue our board considers to be the best initiative for shareholders? And regarding the tax implications, as you know, we have historically adopted a conservative fiscal practices.

Today, we do not have a number regarding taxes for any further step like an analytics spin off. The impact would really depend on several factors like the stock price, the way we do this spin off, there are different ways to spin off a company can be dividend this distribution, can be a capital reduction, etcetera.

It would also it would be affected by the fiscal treatment of other transactions at ALFA so when with the side or the board decides which way to pursue, we will also define the best way to pursue regarding the fiscal front. At this time, we don't have.

25:09 Thank you.

In the meantime, Alex. We do have a couple of questions from participants joining our webcast.

Let me read the first one from [Indiscernible]. What is the current thought process slash timing around the eventual separation of Alpek.

Following the net met model and how Alpek may eventually participate in balancing leverage metrics at the proforma ALFA level? This is a question from (Decklin) [ph].

26:02 Thank you Decklin for the question. As I mentioned before, we do not have an strict timeline to move forward with this.

We will do the next steps when it is appropriate and certainly a minimizing any financial risk for what will be remaining in ALFA. Again, how I think we have ample room with Alpek – for Alpek to not only as Deck mentioned in the previous Alpek call to look at some M&A ways to grow but also to help us at the ALFA level in order to reduce leverage and move forward this, again, we don't have a time or any specific steps.

Neither we have a deadline for that's actually.

27:22 Our next question, which comes from [Indiscernible] capital. Yes, there a deadline for a goal or no goal decision on the Axtel sale?

27:36 No it isn't. There is not.

We are again pushing a product as we can in order to close a transaction and we do not have – we don't have a deadline nevertheless as I mentioned before, we are looking at other alternatives and in order to proceed this continues to take longer than what we expect.

28:09 Next question comes from Mark Bumper with MEAG. And the question reads, ESG is an increasing investor focus, but hardly MSCI is commentary seems quite dated still incorporating Nemak in their comments.

Are you in active discussions with MSCI ESG, any sense on MSCI perception. Thank you for your question, Mark.

And we are in contact with MSCI. Hopefully, that information is updated the next time around the next round of results.

Unfortunately, the MSCI platform or the MSCI rating uses, it's not as other rating processes where you have a back and forth with the rating agency and provide the latest information, but rather they look at publicly available information on a different time basis and drive their conclusions based on that. So yes, short answer to your question, we are in active discussions with them and seeking for that information to be updated as soon as possible.

29:31 And that is our last question from the webcast Alex, do we have any more questions from the line?

29:48 Good morning. Thank you for taking my questions.

Just quick one on that stand. I may the continues to be focused on solely on the infrastructure unit or could that change to doing good company?

Thank you.

30:18 Thank you Alejandro and thanks for the question. We are looking at both options.

We think there is – as we have discussed before, we think there is value in both certainly infrastructure business unit being the largest neutral fibreoptic networking in Mexico after the incumbents is very valuable. But we think the rest of the company also the services part of it is also – is also attractive in particular, because the streaming and social media consumption is also growing significantly and we do see an opportunity for expand those services in particular, in particular in terms of cloud and cyber security services.

So the investors are looking at both.

31:26 Perfect. One more if I may, this is a follow up on my side.

I think the line doesn't really as well, but on total expenses, you mentioned that for twenty twenty one, you'd expect similar to twenty twenty levels or it's taken. You mentioned fifty million dollars or?

31:48 Yes. Let me clarify, and thanks for the opportunity to do so.

In twenty nineteen corporate expenses were around fifty seven million dollars. Last year, the level was around forty-six million dollars, okay?

So we had last year, we already had a reduction of nineteen percent versus twenty nineteen. For twenty twenty one, we expect to close the year, I would say around need forty, around forty five to forty six so very similar to last year, okay?

For next year, we expect to have a further reduction from the forty-six, mainly driven by the transfer or personnel that I used discussed before.

32:42 Excellent Eduardo. Thank for the details answer.

32:48 Thank you.

32:58 Yes, thank you, good day everyone. The question I have is very general regarding experience because expecting longer than only you would expect at the beginning these adjustments.

The question I have is how as the incorporated signed value of in the decision making process? Is there any range or cost of a capital that you are using or anything that you can help us to understand?

Part of decision making process, which is signed value of yours.

33:38 Yeah. Thank you.

Thank you, Alfonso. Certainly, certainly, timing is very important for us not only in terms of the Axtel transaction, but as initial views, also in terms of the restructuring of ALFA, so of course, that is an important and important factor, but really the challenge to be able to gross good enough transaction for us has been very significant since as you correctly mentioned, it have taken much longer than we would like.

34:30 Thank you, Alex. We do have a couple more webcast questions and the first one comes from Mario Epelbaum with First NY.

In a post spin off world, how much of the forty million dollars in expenses is at ALFA. Do you estimate will have to be absorbed by Sigma.

34:54 Thanks. Thanks, Mario.

That's, that's a tough one because we do not have completed the analysis for which one of the functions are going to be transferred to Sigma. At the end of the day, what I can tell you is we have expect to be able to significantly reduce the overall expenses that we are going to transfer to each one of the growth.

And we think the reduction in corporate functions are going to allow us to have an overall reduction.

35:37 Let me take the next question with this comes from [Indiscernible] with Index. Congrats on the results.

My question comes if you see an impact from the changes in electricity regulation in Mexico. And how is the proportion electricity represent of your on a consolidated basis?

Is how much of the electricity comes from self-generation or private? I hope I read your question correctly, but rephrasing a little bit, you want to know about the impact from changes in the electricity regulation and also some more color on the proportion of our electricity coming private sources versus CFE?

36:33 Sure. Thanks for the question.

In ALFA, the majority, I would say eighty five percent to ninety percent of our electricity consumption, e-source from private suppliers. We do not have significant generation in house if you recall, ALFA sold is fiscal generation facilities a few years ago.

So one hundred percent of what resources is from other private suppliers. Regarding the deal, what I can tell you is well we are following very closely the process in the camera they put us and the senate and we will – depending on the outcome, we will try to adjust to minimize the impact.

But for ALFA’s costs, but certainly, today, as I mentioned, we sourced from private suppliers which are affected by this deal.

37:55 We have one last question from our webcast and this comes from [Indiscernible] As lot of them mentioned other sources. One the corporate land, have you explored further any estimate?

38:19 Thanks for the question. Yes, we do.

We have explore different options for the real estate that I refer to as you can as you can imagine, I'm not in a position to give you a value to today since we are looking at ways – potential ways to monetize the estate, but what I can tell you is a significant I would say very valuable real estate in some payroll in Monterrey is forty acres of, I would say very prime real estate.

39:09 Thanks, Eduardo. So it seems that we don't have any questions, Any more questions on webcast or audio for ALFA for corporate matters.

Is that the case, Alex?

39:26 Great. In that case, we will then take questions on sigma.

Roberto Olivares, Sigma’s CFO will answer your questions. Operator, please prompt for questions on Sigma.

39:58 Yes, thank you again. The question I have is regarding the trends—different trends in margins in Mexico and in the U.

S. I just want to see if you can step us to reconcile what's going on here.

It it's only related to cost pressures. Is there something about pricing something about the peso association?

If you can give us some assets on what's going on it. And also, if you can provide some guidance on what we expect for fourth quarter in terms of margin and pricing for the fourth quarter and twenty twenty two.

40:41 Thank you Alfonso for your question. Regarding the first one, I think let me talk briefly about the U.

S. And Mexico.

U. S.

As we stated in the report has been impacted by a few challenges however, these are not specific to Sigma, but impacted the whole industry. And by far, the most significant factor has been the raw material cost increase.

Just to give an idea, some of these materials have increased more than one hundred percent during in the quarter. 41:17 And we also have in the case of U.

S. Some freight fuel and energy cost increases that impacted us.

And in response to this inflationary pressures, we have taken pricing actions. On average, prices in the U.

S. Increased by nine percent year-on-year and in this region, it usually takes two to three months to negative prices with retailers, but by the end of September, prices were sufficient to cover about ninety percent of the impact from high raw material costs and as I mentioned in briefing additional price increases where we negotiated and will take effect on the fourth quarter.

42:06 In the case of Mexico, we have a pretty some performance volume was up. But we have also record revenues mainly explained by the pricing actions to mitigate these same inflationary pressures.

In the case of Mexico, we have sweep pricing that allows us to margin you may remember in Mexico, around fifty percent of our business come from the traditional channel where we have the opportunity to reflect the prices increases more quickly than in the case of the U. S.

42:47 In regards to guidance as of 4Q by the end of the quarter, we start to see some of the raw material cost to decrease especially pork that is returning to normal levels. Usually, it takes about one month to be reflected in our cup of sales.

So we expect to recover some ground of margins by the fourth quarter. Thanks.

43:32 Hi, good afternoon thank you for the call. On Mexico, you given the significant relevance of the traditional child you believe that you have room for price increases in the short term.

And on fixed up prices what are you seeing in terms of pricing pressure into next year considering that current U. S.

Regulation of the pork industry is likely to trigger incremental pork price inflation? Thank you.

44:11 Thank you Gilberto for your question. In regards to the question related to Mexico, We still see I mean, traditional channel is increasing in volume was actually up low single digits during the quarter.

And we have the capability to increase prices there to reach double digit on sales. We usually have the capability to do that and we expect to continue to do in in case is necessary.

As I mentioned, we do not as of right now with see more impact on raw material costs that the one that will already so doing the third quarter, both prices have normalized in the case of the Americas. 45:10 In the case for inflation for next year, gas regulation is in the U.

S. especially on pork, it's increasing but also a lot of the impact from this year on both had to do We thirty, the main ones, if they recover the foodservice channel and this is something that will normalize eventually.

But mostly because of complications on the supply side due to labor shortages is that impact delivered a lower rebound activity. So as COVID faces out, we think that the labor charters will normalize and we think with that the growing activity will also normalize reducing pressures on cost.

46:07 In case of Poultry on the other side, we do – we may might expect a little bit of pressure as well probably in the coming quarters because poultry has normalized yet although this year, we have some contracts that hedge a little bit our exposure to this market. Those are going to be negotiated for the next year in the next couple of months.

46:42 Thank you very much.

46:43 Thank you Gilberto for your questions.

46:53 Thank you. Just, I have one question remaining.

How much of your sales our exports to China and from the – for the European operation. And when you expect this to normalize and I don't know if you can quantify the impact that you saw during the quarter in there?

Thank you.

47:15 Yeah. Thank you, Rodolfo.

Yes. And let me just do a recap for everyone benefit.

We have a [Indiscernible] business which sells fresh to meet the globally and do we have an impact this quarter due to a temporary suspension of a license required to export to China and the main two impacts were related to achievement that were in transit and had to be diversified and the second one related to lower sales volume. We quickly of the issue and we're currently waiting for a reply from the Chinese of it is expect to result for ALFA in the short term.

We are in the meantime, in strengthening our market finish as well as other channels and the goal is to diversify sales and mitigate some of these effects also increasing for example, value added products within Europe that has higher margin. Exports to China represent close to mid-single digits of the whole European business units.

I hope that question, Rodolfo.

48:34 Yes, and just a follow-up if I may back to the U. S.

Are these labor shortages, are they preventing you? I mean, besides increasing your cost structure I mean, are they preventing new for lending product, I mean are you having trouble getting the products to the sales?

I mean or this is mainly a more of a financial more of a cost pressure?

49:05 Sure. Thank you Rodolfo.

I would say it's both and we had some increases in raw materials because of our suppliers are running their plans slower and that has increased prices of raw materials, But also we have had some moments doing the pandemic this here. We have some issues filling up the position, the proposition position that we have in is some of our plants This this not been a big impact, but we have had some issues and that also is happening rule when you see a freight.

The amount of drivers that is out there that is willing to take that job. It's also something that is impacting the cost of freight.

50:02 Thank you.

50:04 Thank you Rodolfo for your questions.

50:17 Thank you very much for taking question I think some of my questions have already been answered but perhaps if you could comment on the EBITDA and where foodservice hand versus pre-pandemic in each market that would be super useful and what are you seeing during the fourth quarter? Thanks.

50:36 Hey, Alejandro. Sure, so we continue seeing our recovery input service.

We have sales very close to pre-pandemic levels still below but EBITDA above pre-pandemic levels, do mainly to customs and expense initiatives. Let me give you an example of Mexico revenues were close to nine percent below pre-pandemic levels, but EBITDA is fourteen percent above pre-pandemic levels.

And in the case, for example of Europe, revenues were eight percent below and EBITDA was three times higher than twenty nineteen. 51:19 We although we have seen recent search there doing during the last month of COVID-19 cases, we have not seen additional impact on this channel.

On the contrary, we're looking into a faster than expected recovery.

51:39 Thank you very much.

51:41 Thank you, Alejandro.

51:51 Hello, Roberto. Just one quick question on free cash flow, your CapEx seems to be very below your guidance.

Are you still expecting to spend two seventy million dollars or should we postpone some of that to next year?

52:16 Sure. Thank you.

Thank you, Alejandro. So, yes, just during the first nine months, we have invested close to one and twenty million which is a point two percent increase versus last year and the deployment rate of CapEx also increased more than one hundred percent year-on-year.

But we have paid some challenges due to COVID lead times are little bit higher, but this has not a stuff and maybe is to continue to deploy our CapEx and we will be within range of our guidance.

52:57 Excellent and one more if I may, given you strong free cash flow generations, should we expect it not to ten modules to ALFA this year?

53:12 Sure. So just to comment on two things besides the part of dividends, we're ready portion of the cash that we have on hand has already assigned to CapEx.

As I already mentioned, maybe to continue at a later in the deployment rate. We also evaluating investing in some inventory during the winter months, one usually prices are on average lower than on the summer months due to seasonality.

But yes, we might still see a portion of dividends in the fourth quarter. I would say to total an amount similar to those that that we have in the previous years.

53:56 Great. Thank you Roberto.

53:59 Thank you, Alejandro.

54:05 Thank you, Alex. We do have two webcast questions, but I believe they were covered with the previous questions.

One was related to margins and the other one was related to the Chinese exports. So, thank you very much to [Indiscernible] for your questions.

54:34 Actually have one question that has just come up from with [Indiscernible] If the export process isn't successful, it's Sigma IPO in your alternatives?

54:56 Hi This is Eduardo. I think IPO, I think it was in the past, and some alternatives, we feel today the markets are not in particularly in Mexico, are not recognizing the intrinsic value of the companies.

So we don't think it is an option in the short term to do an IPO of Sigma in Mexico, but certainly that would be an alternative conditions improved.

55:43 And that was our last webcast question related to Sigma, Alex. No more audio questions, Is that the case?

55:55 Thank you. So, we can now move forward and take questions on Alpek, Axtel, and Newpek.

From Alpek, we have Jose Carlos Pons CFO, from Axtel, Eduardo Escalante, and Adrian de los Santos CEO and CFO respectively, and from Newpek, Rodolfo Gamboa, Sr. Vice President and Oil and Gas.

Could you please prompt for questions on Alpek, Axtel or Newpek. Alex?

Thank you.

56:44 Hi, thanks for taking my question again. Just on the, I listen throughout the call and give out as we mentioned very strong relation spreads and Chinese spreads and obviously very good performance from this quarter.

I was wondering if you could comment a little bit on how our contract negotiations are margins for contracted when looking for twenty twenty two. If you can share something it would be great, but it's not and comment on that if you have already [Indiscernible] negotiations with clients in center?

57:24 Carlos, this question is for you.

57:29 Thank you Alejandro, well, thanks for your question. Yes, certainly the dynamics for contract negotiation are, I would say a little bit favorable to operate at this moment.

Supply demand specifically in the North American Region, it's short. So there's all of our customers are asking us to increase the volume and increase the deliveries for products.

And therefore, I mean, that complementing which the current condition of margins that better saving in the quarter more or less what we're seeing are far two hundred fifty on occasion margins. So we do expect that we will have an important improvement on overall margins going forward of twenty twenty two.

How much, well, hopefully we will be able to tell you in the first quarter call for I mean that we will have earlier this next year. But certainly, the dynamics are positive in terms of volume and the dynamic it's positive in terms of margins and what we're seeing in other markets.

58:44 Great. Just follow-up, have these contract or negotiations already taken place or are very still ongoing?

58:52 No, They are actually ongoing at this moment.

58:57 Okay, great. Thanks.

58:58 We are not finalized that. We will end up probably in the first part of December.

59:06 Great. Thanks.

59:14 Thank you very much, Alex. So I think we went through all other the questions, there are no more webcast questions either.

I would just like to thank very much for your interest in ALFA. And if you have any additional questions, please feel free to reach out to us we would be pleased to assist you.

We also extend our best wishes to you and your families to stay safe and healthy. Thank you very much for joining us today and have a great day.