Grupo Bimbo, S.A.B. de C.V.

Thank you very much. Good afternoon, everyone.

On behalf of Grupo Bimbo, I hope that you and your families are healthy and staying safe during these times. Thank you for joining us today.

Connected on the line today is our CFO, Diego Gaxiola; our BBU President, Alfred Penny; and several members of our finance team. We are very pleased to read another record quarter in which the pandemic-driven patterns continue.

Thanks to the efforts of our frontline associates, who have executed with excellence and dedication during these unprecedented times, we have been able to capture significant opportunities across our markets. We continue to experience very strong results in our North America and Latin American regions.

The QSR business, which was affected by the COVID-19, is starting to show sequential improvement. We expect these positive trends to continue through the end of the year, thanks to our strong and diversified global portfolio and the trust that our consumers have in our brands.

We are fully committed and determined to continue feeding and nourishing the world with the excellent execution demonstrated each and every day by our valued associates. Now taking a look at the regional results of the third quarter.

North America posted a strong 23.5% growth -- percentage growth percent in peso terms. And while there was a benefit from the FX, sales in dollar terms increased 8.5%.

This growth, along with the significant margin expansion, was driven by continued high demand from are home consumption, influenced by the coronavirus pandemic and the consumers shipped to reliable brands. Volume growth was very strong across the retail channel, which includes grocery, mass merchandisers and top.

We experienced market share gains across most categories. And while e-commerce continued to grow at elevated rates, it's still a relatively small percentage of our total sales.

This strong performance was partially offset by weak volumes across the QSR, foodservice and convenience channels as they remain under pressure to come with nine. Our adjusted EBITDA margin reached a record level at 14.4%, reflecting the strong sales performance lower commodity prices and productivity benefits from past investments, which were partially offset by onetime expenses incurred due to the coronavirus.

In Mexico, sales increased nearly 1% as a reflection of better performance mainly across the retail and traditional channels, as well as in the bonds, bread and cake categories. We also experienced a sequential improvement in the Sweet Baked goods category.

Nonetheless, the Salty Snacks & Confectionery categories as well as the convenience, vending, wholesale and food service channels remain under pressure due to COVID as well. Adjusted EBITDA margin contraction was mainly attributable to the sales mix and onetime expenses associated with COVID-19, such as labor and distribution requirements and safety equipment.

As the end of the year approaches within a challenging consumption environment in Mexico, we will continue to proactively strengthen our portfolio and improving revenue growth processes and execution at the point-of-sale in all our channels. In Latin America, the 10% sales increase and the extraordinary margin expansion of 310 basis points, we're due to strong performance in the bread and tortilla categories throughout the retail channel, notably in the Latin Centro division, Peru, Brazil and Chile.

Results were also benefited by FX rates, but partially offset by weak results in Argentina, where a macroeconomic environment and consumption habits continue to be challenging. In terms of profitability, several initiatives were implemented, such as Zero-Based Budgeting and the turnaround project in Brazil, which supported increase in EBITA.

In EAA, sales increased 21% as a result of FX rates benefit and healthy results across the QSR business on the U.K. as well as strong performance of the bread and bun categories throughout the region.

Results were partially offset by weak performance in Iberia. Which was negatively affected by consumption habits due to the Pandemia and also the lack of turns in Spain and Portugal.

The EBITDA margin expansion of 50 basis points was mainly explained by good sales growth and better results in China, including lower integration expenses. Finally, we are pleased to announce that we increased our ownership in our JV Blue Label Mexico, which provides a wide range of services to small merchandisers in Mexico.

Such as sale of electronic airtime deal, payments with credit, debit and food vouchers and cash-back transactions. Our commercial brand.

And with this transaction, we aim to promote growth and productivity in the traditional channel using our technology. We welcome our new associates to the Grupo Bimbo family.

And I would like now to turn over the call to Diego, who will walk you through our financials. Please, Diego, go ahead.

Thank you, Daniel. Good afternoon, everyone, and thank you for joining us today.

I would like to start with a summary of our financial results for the quarter, which were outstanding. We reached record levels of sales adjusted EBITDA.

We are clearly benefiting from being a global and diversified company in terms of channels, categories and geographies. And from participating in a resilient industry.

As most of our revenues are in hard currency and volume has been impressive in most of our markets, especially in North America. I would like to highlight that for the third quarter, our hard currency revenues represented more than 60% of our total sales and close to 60% of our adjusted EBITDA.

Operating income increased 47% due to the 18% increase in our adjusted EBITDA and to lower other expenses, mainly because during the third quarter of 2019, we had a negative effect from our MEPP reserve of a little bit more of MXN904 million. And this year, we had a small benefit of MXN150 million.

Our financing cost increased 6%, reflecting higher interest expenses due to an unfavorable FX rate versus the third quarter of last year. The net effect of these factors yielded a significant improvement in net majority income of 85% and a record net margin of 4.2%.

The turning to the balance sheet. We closed the quarter with a net debt to adjusted EBITDA ratio of 2.2x.

Our total debt decreased by MXN6.5 billion, as compared to the last quarter, mainly because of the strong cash flow generation. So far, we have prepaid an additional USD 200 million of our previously drawn revolving credit facility.

So we ended the quarter with $118 million outstanding in our credit facility. With this, we currently have close to $1.9 billion available in our credit line, which provides us with flexibility and liquidity for the future.

As we keep a flexible amortization profile with an average maturity of 13.3 years and an average cost of 5.7%. Our net operating working capital, which mainly considers accounts receivables, inventories and suppliers has improved significantly by two days over the same period of 2019.

Which is equivalent to MXN1.8 billion, mostly due to an improvement in our accounts receivables as well as with the suppliers. For the first 9 months of the year, our gross cash flow was 2.7x higher when compared to the same period of last year.

Our free cash flow before dividends and share buybacks totaled nearly MXN13 billion, from which we have returned MXN5.7 billion to our shareholders, grew MXN3.3 billion in the buyback program, and close to MXN2.3 billion in dividends. In this regard, we made a decision to cancel more than 169 million shares.

Which represent nearly 4% of our shares outstanding as we continue to proactively manage our capital structure to increase shareholder value and reinforce our commitment for sustainable long-term value. Finally, I would like to confirm our outlook for the year, an expectation of a low double-digit growth rate for our sales, mid to high teens for our adjusted EBITDA, a better effective tax rate from the previous estimate, as we now expect to close the year between mid to high 30s, and finally, we are also adjusting our CapEx estimate to be in the range of $550 million to $600 million.

We are optimistic about the future as our results continue to be strong. Our teams are doing an extraordinary job, and our global diversification continues to pay off.

That concludes our remarks. So please, we can proceed to the Q&A.

Hi. Good afternoon, everyone, and I also hope everyone remains safe.

My first question is related to Mexico. Can you comment what would have been the performance this quarter of the EBITDA, excluding the onetime expense related to the pandemic?

And the second one is regarding your share buyback program. How should we think about it going forward?

And if you are going to cancel the purchase shares on a regular basis or not?

Diego, would you take the questions?

Yes. Yes, Daniel.

Fernando, on the first question, regarding the performance without the COVID extraordinary expenses for one, I would say that the EBITDA will be still below what we did last year. Just excluding the expenses, again, because the most negative effect that we are facing in Mexico because of the pandemic is in the top line with some particular channels that are completely shut down and some other categories that have been negatively affected because of the pandemic, Okay?

And could you repeat the second question, please? Fernando, did you have another question?

Yes, sure. It is regarding your buyback program that how should we think about it, I mean, going forward?

And if you are going to cancel the Rupert shirts on a regular basis?

Yes. Let me tell you again.

As we mentioned in the last conference call, as long as we continue to have a strong financial position as is clearly as we do today, and we see an opportunity regarding the price of the stock. We're going to continue to be active.

We still have more than MXN8 billion in our legal reserve. In terms of the frequency of the cancellation, I would say that this time, we did have to hold an extraordinary shareholders' meeting because the amount of shares, almost 270 million shares that we had on the treasury, it was a lot.

It was almost 4%. So we thought it did make sense to have this extraordinary meeting.

I think that from time to time, what you could expect is that we will cancel the shares on the regular shareholders' meeting in April.

On the U.S. performance, I mean, big performance on the volume side, indeed, I mean, we've been following news and strength across the categories can you talk about the competitive dynamic, particularly in Snacks and sweet baked goods in the U.S.

recently. I mean strong performance at the category level, we can follow that, but it seems -- and you actually mentioned that in the press release, you're grabbing significant market share from the competition.

So what or what is driving that? How or why is that happening?

If you could provide some color there on the competitive landscape? The second question, just a follow-up to Diego's point on taxes.

I mean can you just explain -- elaborate a little bit more of what's driving the lower taxes in the quarter? And obviously, in your guidance for the year, if I'm not mistaken, your organic before your guidance before was high 30s to low 40s?

So your thought on that would be appreciated. Thank you.

Daniel, I'm happy to take...

Go ahead, Fred.

I'd be happy to take the question on Sweet Goods. Well, the first thing I would say is that we're pleased with the performance across virtually all of our categories, not just sweet goods.

But I think to your point, we've outperformed in Sweet Goods. In terms of growth and relative to the category and gaining market share.

And it really cuts across all of our brands, including snacks. So it would be the Enemas brand, being both sweet goods, Marinela snack cakes and bar Sulfa snacks that have all been performing well.

To some degree, it's driven by some strong product innovation and expansion of some new products but I think in large part, it's the strength of the brands and the portfolios with really solid execution by our front line. And hopefully, we'll see that continue.

Okay. Ricardo, this is Diego.

Let's say a little bit on structurally what we have on the effective tax rate. So probably everybody has a better understanding of even that it has been improving, why is still above the statutory rate in Mexico.

First, if we depart from the 30%, which is the statutory rate in Mexico, I would say that you have to take into consideration that in Mexico, we have a negative impact because of the partial deduction from social benefits. And also, we have tax, which has a fiscal implication, although not a financial impact on the P&L, which is the -- what we call the inflationary tax.

These two together represent around 7%, 7 percentage points on the consolidated tax rate. I would say, from there, we have another negative impact that has been decreasing substantially, which is the effect from the operations that have a loss before taxes.

And as you know, we have a very conservative approach towards the accounting treatment. So we have been creating a deferred tax.

And this has been pushing also the effective tax rate above that level. This quarter, clearly, we're seeing an important decrease as compared to last year as well as last year was better than the previous one.

And on this regard, we also feel optimistic that this negative impact will continue to decrease. And even though if in some point of time, we start to generate profits in these specific operations, it's going to have a very positive impact on the effective tax rate because we did not create the deferred tax.

So that profit, let's say, will go on an accounting perspective without taxes. And then also consider that we have an operation longer in many different countries, probably just to mention the U.S.

that it's a very big operation in our P&L. And the statutory rate is more in the 26%.

So putting everything together, we ended for the 9 months 13 as I mentioned during my speech, we believe we're going to be between 35% to 38% by the end of the year. And we think that this will continue to recover slightly in the coming years.

Appreciate the space for questions. My first question is for Fred, perhaps there's been a clear preference for branded products.

So I was wondering if this has led to additional shelf space in the U.S. given sort of some of the velocity and some of your key products?

That's my first question.

Yes. I hope you're doing well.

Yes, if you look at the category trends in commercial bread and bonds, pretty much across the board, you would see the branded participants with fairly solid performance, strong numbers. That's in the context of a category that's performing overall strong, I would say, probably double digit, low double-digit on a revenue basis for the total category.

We've had some shelf-space gains. That have helped us.

But I wouldn't call out anything significant. It's just the overall lift we've seen across our brands since the essentially since the pandemic started.

And I guess I would be remiss if I didn't take the opportunity since I've got the question and the window to recognize and knowledge really what I think has been an incredible job by our associates, in particular, our frontline. We're now into this going on 7 months, I guess.

Operating at elevated levels in a challenging environment, as we all know. We're living it.

And I wanted to take the opportunity to recognize them. But thanks for the question.

We're here. Second question, my second question is on Blue Label.

Daniel, I suppose the question is sort of what prompted you to take a majority stake now and maybe if you could expand a bit on sort of the strategy, the longer-term strategy behind it?

Yes, Alvaro. Well, this is a minor investment and the opportunity came because of the relationship with the venture, the other venture stockholder and we've been working with this initiative for a good number of years, and we believe that there is potential to do better and to do more to expand our service.

And basically, that's what we're aiming to do, and we feel that there's an opportunity to better serve our customers with an expanded portfolio of services.

I have like two questions today. One is, so our generating so much cash how can we think about the cash allocation strategy for next year?

If you're thinking of doing something with the 2022 maturity ahead of the due date and the second question is on the improvement on the working capital front. Particularly, you mentioned the receivables in the suppliers line if we should continue to expect further improvements on those two items?

Or if they should stabilize at these levels we're seeing for the quarter?

Go ahead, Diego.

Yes. Well, it's a little bit hard right now to talk about 2021.

It's a very uncertain situation that we're leaving. What I can tell you is that we are still committed to generate free cash flow and continue to deleverage the company.

And again, still early to talk about the specific amounts. Regarding the working capital, it has been improving, I would say probably since two years ago, since the end 18 there is still room to see an additional improvement, particularly in suppliers.

We have been working very hard on supply chain finance program in North America, the U.S. to work with Canada.

Which I mean has been bringing a lot of benefits, still some additional room for improvement. And of course, in some other operations, we also see a potential of improvements.

And in accounts receivables, I would say it's stable. We might see some improvements probably for next year where we will see a slight decreases in inventories.

That spiked a little bit because of the current situation that we have been leaving.

Yes. Diego and team, I hope you guys are doing well.

Congrats on the results and thanks for the space for questions. Let me start with this one.

Some companies are already rolling out some new labeling in Mexico. So I wanted to see if you guys have done any of that?

And how you feel it's coming along, specifically I don't know if you guys already have this number, but I imagine you do, as a percentage of sales in Mexico, can you give us an idea of what percentage of the portfolio will be affected by the implementation of the labeling law? And then my second question is related to EAA and Latin America.

Between volumes and FX, can you tell us which driver was the most impactful one on the top line?

Well, on the new labeling, we have been able to comply with all the deadlines that were set forth. It was a short window, but fortunately, our teams were quite dedicated and fast on responding to this huge challenge.

I'm grateful to their work. The new labeling for us is -- it was a complex nature.

We had to print almost as 1,500 new packages in a couple of months. So it's significant.

So far, I would say that the impact in terms of volumes, it's early to tell, but we're finding that our volumes are stable compared to the previous months. And we're being able to reformulate and get greater cities from labs and all breads and bonds, our Sameshima brand are without any Black Octeons.

And we have also options on the tortilla side and the solid and RADCOM's categories with products that don't have labels. But all the snacks and basically, sweet baked goods and cookies do have at least one label.

On the EAA and the LATAM, Diego, would you like to take that question?

Yes, Daniel. Hi Felipe.

In EAA, because of the so devaluation, around 70% of the growth of the 20% growth, a little bit more than 20% came because of the devaluation of the peso. In the case of LATAM, it's on the other side, we had a negative effect.

There are some currencies such as the real in Brazil that evaluated more than the Mexican peso. So excluding the FX in LATAM, the growth would be more in the low to mid-teens.

Since we're seeing a pretty good environment for the U.S. How should we think about the pricing?

And then that ties to my second question. Which is the increasing raw material prices.

We have been seeing a very steep increase in soft commodity prices and oilseeds. So wondering if you can update us on your hedges.

And if you think that there are opportunities for you to adjust your prices to cope with this potential threat on the cost side. So that's my first question.

Lucas, I'll defer to Fred on the first part on the commodity outlook, yes, we have seen an increase in commodity prices, especially for wheat in the recent weeks. We have a standard policy for hedging, and we had been hedging for some months.

So at this point in time, we're not feeling the pressure, and we're well covered. But certainly, if these high prices stay where they are or get even higher, we would have to think on reflecting those costs.

But that's where we are in the commodity cycle at this point. And Fred, if you want to answer the other?

Yes. Absolutely, Daniel.

Lucas, thanks for the question. We really since the COVID-19 pandemics began in Q2, right into Q3, we've had to try to manage our promotional activities to balance capacity constraints and capacity demands with what the market was requesting.

And so we've continued to do that. We have begun, I would say, later in Q3 to where we felt we could manage to do it from a capacity standpoint.

To be open up somewhere promotional activity. But really across most of the categories, I would say, almost all of the categories, it's been a challenge to balance the capacity to the demand.

So that we're not shorting any given region or any given channel or any given customer, and that's been what we've really been focused on through the last, call it, 6-months plus now.

Fred, so just to follow-up on this one. Since we're seeing sort of a third wave of COVID in the U.S., if you have any issues in the production side or anything that could be concerning that would highlight to us?

Well, I think at the run rates we've been experiencing in Q3, I would say, I think we can manage the capacity issues. Quite frankly, I'm more concerned as my management team is, I think we can manage the capacity.

I'm really more concerned about the spikes we're seeing, the discussions and the forecast of a second wave and what that all means in terms of our ability to keep all of our associates safe and execute every day. And that's just the reality that everybody has to deal with these days.

But if the run rates and the demand stay in the ranges, they've been in Q3, I think we can continue to serve the market fully.

And if I may, on a different subject on the M&A subject, I think you guys have been mentioning that since your leverage kind of allows you to think about acquisitions again. We would be looking at opportunities.

There were some news in the press recently about your interest in maybe some assets in India. So wondering if you can comment about if we should expect anything for maybe later this year or next year in terms of acquisitions and remind us on in terms of what the size is and regions you're looking at list?

Yes. Well, we don't talk specifics about our opportunities on the M&A side.

But let me tell you that in general, we always continue to look at the landscape and review our opportunities with the different business divisions. And in general, I would say that we haven't changed our profile of investments that we mentioned in our conference.

So you can expect continuity on what we've been saying in the past.

Daniel, congrats on the results. Just two questions on my side, both on Mexico.

First one is on the top line, I know you mentioned there are certain channels that dragged that performance. Just wondering if you could share with us kind of what was the sales growth by channel to get a sense how much was the drag from food services?

And how strong, I guess, was some of the other markets like retail or the traditional store, that would be helpful? So that's the first question.

And then also on the margin side, if you could elaborate a little bit more about the nature of the compression. I know you mentioned sales mix and COVID expenses.

Just wondering if on the sales mix, it had to do more change in mix between channels or whether you're actually seeing trade down and maybe a change in mix within products and whether you expect that to continue as we move into the fourth quarter? Or do you expect some sort of improvements?

And also, if those COVID expenses are truly onetime or some of them will actually remain and it's part of doing business in this post-covid world.

Well, on the COVID side, they will remain as long as COVID stays here. On the mix of the channels, we saw, I would say, more on the line of double digit declines.

On segments like food service, wholesalers and the c-store channel. And more affected were categories that were linked to imports buying that were more on the go eating, snacks, more importantly than [indiscernible].

So I think I can give you a sense of a color of the impact, but we're not seeing a change within the category trading down or something like that. So it's more impulse items versus pantry items.

Congratulations on the results, and thank you just a couple of ones. For Mexico, you mentioned about the pressure in certain channels such as convenience, due to the pandemic.

And there just one that is so far, we have started to see a slight recovery in inconvenience. Or if you have continued seeing this trend during October, the weakness trend?

Yes. It's recovering, although it's not at the same level of the other channels that are doing well.

So certainly, convenience has been one of the channels that have had to bear the impact of the convenience here and in other countries as well.

And the second one would be for Fred. Just with the acceleration in online and e-commerce since the unfettered I'm also curious if you could give us some more details on the e-commerce channel in North America and how it has been developing.

Yes hector, thanks for the question. If I got it right, you're asking specifically about e-commerce for the North America or the U.S.

business?

The U.S. business, specifically.

Yes. It's been extremely strong.

I'd say that. It's still a relatively small -- in total, a relatively small portion of our total revenue base.

But the growth rates have been extremely strong. We've invested behind it.

We're going to continue to invest behind it. And I think it's consistent with the growth we've seen, I think it's consistent with consumer behavior, obviously, in the sense that consumers, if they can, choosing to not go into a physical store and whether it's click and collect or literally delivered to the home, that's really accelerated, I'd say, almost dramatically in the last 6 months since Covid hit.

So we'd expect to see that continue. One of the questions in my mind is when we get to some semblance post-COVID normal, whatever that looks like, to what degree of the accelerated e-com trend is going to continue?

Or are they going to slow down? And time will tell.

And congrats, Daniel and I go to the results. Just two quick ones.

So first, thanks for updating the CapEx number, and we saw actually the velocity was a little slow so far in spending. Could you elaborate a little bit on where you basically saved on CapEx to what was the initial guidance of around $700 million , down now $550 million to $600 million .

And how much of that do you think you will need to step up spending in subsequent years? That would be my first question.

I want to answer? Yes, Anil.

Let me tell you that last time in July that we put up the guidance again, and we mentioned the MXN700 million which was below the range that we mentioned back in the bin bode in November, it's because we were reopening the appetite to invest in all the different projects that we had in the pipeline, either for growth or productivity or maintenance. But reality is that the restarting -- the whole process has taken a little bit more time, and this is why we're seeing a delay.

It's not that we cancel projects is that they're going to be delayed in the time that we took the decision to invest until the cash flow is required for the investment. So definitely, Ben, as you are asking, we are going to see an effect in 2021.

Still, we don't have the number, but we feel -- I mean, quite sure it's going to be a substantially bigger number than the one that we will end in 2020 and sure it's going to be a little bit more than the typical CapEx that we have had every year.

Okay. Perfect.

I guess, those investments are needed anyway. Now one last question and really more of like a trying to understand a little bit the dynamics and what you're thinking about the different markets into next year?

So we got the question, talked about the commodity cost headwind, which was one of the things I wanted to address anyway and the potential need and the risk for maybe having to raise prices as a result of that if commodity prices remain as high. So in light of likely a more in light of likely a weaker macroeconomic environment in most of the operating regions.

How do you feel about the ability to actually push those prices through? Or would you think of what you've been gaining in market share and relevance, just particularly in retail, you would like to defend that and maybe take a little bit of hit of the margin, but just to maintain those sales and then think of price increases at a later stage.

Just to understand a little bit the dynamics and the strategy going forward?

If I may, what I would tell you is that we relied mostly on decisions made by our local teams in each country. And within each country, they are responsible for, one, delivering on the targets of profitability and sales.

And secondly, we want them to also have a good performance in the market. So decisions on pricing on what do they do in the marketplace, it goes market by market.

And we haven't changed our policy, and that's the way we run our business.

Diego, thanks for the space for questions. The first one is regarding the U.S.

I mean, profitability improvements have been very clear in the last couple of quarters. And as you mentioned, part of it is explained by the strength in top line has been driven by advanced consumption and which might probably normalize to some extent.

The question here is, how sustainable would you say that current levels are going forward? And the second one, in this same line, when the pandemic is over, we go back to normality, whatever that is.

But what would you say is on Bimbo hands to retain some of the increased demand business in the last couple of quarters?

Daniel, I'll take the first question. I'll take Miguel's first part.

I think like every -- like most CPG companies, certainly CPG food companies, we're trying to figure out what the future could look like even before we get post COVID, whatever normal might be and we're monitoring various forecasts, and we'll see where that nets out. I wouldn't want to give any predictions because the estimates are pretty broad ranging.

I think we're confident in the fact that we've over the last, call it, six months. Now we've gained a large number of new consumers and new households into our brands.

We're investing incremental marketing support behind that to try to retain as many of those new consumers as possible as we get into the post-COVID or a more normal situation. Which I think should serve us well in terms of our margins going forward.

And we're seeing some of the benefits of the continued investments we've been making to drive productivity through the organization, CapEx investments, etcetera. We're continuing to look at that.

And I think that's an important part of our strategy and our thinking going forward as we work through this and get to a more normal category run rate, whatever that might be.

Could you go back to the other question, please?

The second one is, whenever we go back to normal, what would you say on Bimbo has to retain some of the increased demand witness in these last couple of quarters?

Yes. Well, it's sort of the same response as FAD.

We gained new households in most of the countries. And we're implementing plans to retain them as much as we can.

We're measuring penetration. We're fine-tuning our marketing investments.

And we're opening up our game in quality and innovation, so that these new households can stay longer with as we can.

Please go ahead. I have a couple of questions.

Firstly, can you please share some more color on your pricing strategy in the U.S.? Are you keeping pace with your competitors?

Alessia, you're probably not going to like the answer, but I'm not going to be specific about pricing strategy. I think I answered the promotional question earlier.

Certainly, whether it's Nielsen or IRI, we would give you a good sense of what the category is doing. We've really been focused heavily on ensuring that we can meet market demand across all of our categories.

Our capacity capabilities are not equal across all categories. Some are more restricted than others.

And so we've done our best to manage production capacity with promotional activity. To ensure that we're meeting market demand as best as we can.

But I wouldn't want to speculate on forward pricing strategy or forward promotional strategy.

And on that issue, on the U.S., do you see your U.S. margin as sustainable going forward once the food service and QSR channels normalize?

Well, it's important to understand that foodservice, fresh frozen foodservice is a relatively small portion of our full portfolio. It has been certainly impacted fairly significantly in a negative way with COVID and will benefit from that coming back.

But it is not going to be a material impact on overall North America results as that happens.

But are we expecting your U.S. margin to -- I mean, you reported some pretty great margins today.

Do you see this as a new normal going forward?

Well, we don't give guidance. Let's stay tuned and see what happens to the market.

We're living in an extraordinary time right now with consumer demand. That's completely shifted to in home consumption that we've not seen before.

And everybody is trying to figure out to my earlier point, what this is going to look like as we get back to something, hopefully, more normal, whenever that is.

Very quickly. And sorry if this was asked, I may have missed but are you guys giving any color on COVID-19 expenses in the third quarter, maybe quantify the impact as in the second quarter or not?

I can take it, Daniel. For the quarter, core expenses were a little bit more than 100 basis of our consolidated revenues is different by market.

We're not disclosing the expenses by each region. And the accumulated impact, it's also above 100 basis for the 9-months ended.

I remember that in the second quarter, it was close to 2 percentage points. It has been coming down, but we're still seeing this negative effect.

Got it, 100 basis points, very clear.

Well, thank you very much for your participation and your questions. And as always, our Investor Relations team is open to any of your questions or comments.

Thank you very much, and hope to see you in the next presentation.