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

Good afternoon, everyone, and thank you for joining us. Connected on the line today is our CFO, Diego Gaxiola, [Indiscernible] president [Indiscernible] and several members of our [Indiscernible] team.

We had a very strong start in the year. [Indiscernible] performance was exceptional as we reached a record level of sales for our first quarter and gain market share in several categories.

Our volumes grew across all organizations as a reflection of the high demand we are experiencing, and that our grants are resonating with our consumers. The salty snacks, buns and rolls, snack cakes, pastries and confectionery categories outperform as did our Mexico and Latin America regions and our QSR business.

We also reached 30 gallons of first quarter profits. However, we are experiencing expected margin pressure from a highly inflationary environment globally.

More specifically, we're seeing increases in commodity, freight and label costs, as well as shortages across the supply chain, in the U.S. U.K.

and Canada. We have been leveraging many tools to offset rising inflation, including price increases, revenue growth management strategies, category and product mix, and also pursuing many productivity initiatives.

We will continue this approach throughout the year. And we will also continue to proactively look for restructuring opportunities across the value chain and we'll continue to deploy our digital transformation strategy.

Just a few days after our last earnings call, the global environment changed dramatically, with Russia's invasion of Ukraine. So, I would like to discuss our presence there and the [Indiscernible] we have made.

We have a plant in Russia and one in Ukraine, which primarily serve quick service restaurants. Together, they account for less than 0.5% of our consolidated net sales.

Our priority and biggest concern are that well-being of our associates in both countries. And we're helping them through different actions to protect safety.

They will continue to receive support from us through these difficult times. We decided to suspend sales of our Bimbo brand and hold new investments as well as new capital and marketing investments in the country.

The byproduct of this conflict is commodity price volatility, which Diego will talk about shortly. We will continue to monitor the situation very closely and update you with any changes.

On a very different topic, yesterday, we announced that we signed an agreement to sell Ricolino, our confectionery business. We founded Ricolino in 1970.

And today, it is the leading player in the confectionery industry in Mexico and exports its products to 17 countries, including Central America, and more importantly, the U.S. The strategic rationale behind this decision is that we're focusing on our core businesses, grain-based foods.

We plan to continue to grow and further consolidate our position as the largest baking company in the world. We sold Ricolino at highly accretive multiples to Mondelez, a company that can take our beloved brands and associates to new levels.

I deeply thank and recognize the hard work of our nearly 6,000 associates that have done an outstanding job to make Ricolino the leading player in Mexico. We reaffirm our commitment to Mexico as well.

In fact, we will be investing half of our global CapEx for the year in several projects in the country, such as a new plant in Monterrey, new baking lines in Tijuana, and one of the fastest bond lines in the world located in Toluca. And lastly, I would like to highlight the specific sustainability accomplishment.

The affiliate organization is now operating with 100% renewable electric energy. And with these 93% of our global operations are using renewable energy, and 21 countries now use clean energy.

I believe this is -- this is an epic that very few food companies have on their company. I hope you have received our invitation to a brief call on May 18, where we will be sharing our new sustainability strategy.

Now, reviewing the quarterly results by region. North America had a very strong quarter with net sales growing 18.8% in dollar terms.

The branded business continued to perform very well, led by bread, buns and rolls, sweet baked goods and snacks. We grew share in most of our categories despite a very difficult operating environment.

We successfully implemented productivity initiatives and a second price increase across our portfolio while experiencing volume growth and market share gains as we continue to be the first choice of our consumers in most categories. Our adjusted EBITDA margin in the region contracted 180 basis points, mainly due to rising commodity rates and labor inflation.

This was partially offset by a favorable branded mix and productivity benefits from past restructuring investments as well as cost saving initiatives. We are cautiously optimistic about the future as we face a dynamic and evolving environment, including labor shortages, inflation, and consumer spending uncertainty.

However, we're laser-focused on what we can control and believe we will overcome these challenges and succeed in the year. In Mexico, sales improved by 19.5% attributable to volume growth, favorable product mix, and price increases.

Every channel, also it's double-digit growth as did most categories. most notably, snack cakes, sweet baked goods, bread, cookies, confectionery, and salted snacks.

Our increased presence and execution at the point-of-sale, and favorable consumption trends also helps boost the results. Adjusted EBITDA margin contracted ten basis points, mainly reflecting higher commodity prices, but it was almost fully offset, like productivity savings across the supply chain.

In EAA, excluding FX effect, Phase increase 21.1%. This was a result of double-digit growth across every organization, mainly Iberia, U.K and the QSR business.

Coupled with the contribution from the acquisition of Modern Foods and Kitty Bread in India. The adjusted EBITDA margin, contraction of a 120 basis points resulted from the higher cost of sale, the higher inflationary environment, and a labor strike impacting our distribution in Spain, which has already been resolved.

Finally, moving on to Latin America, net sales excluding the FX effect increased 25.1%. This was driven by strong volumes in launch countries and favorable price mix across our three-year organization and the acquisition of Aryzta's QSR business in [Indiscernible].

Despite challenging conditions in several countries, our adjusted EBITDA margin expanded 370 basis points reaching the highest level for the first quarter at 9.6% attributable to our turnaround efforts in Brazil, which resulted in EBITDA gains for the third consecutive quarter. And in Argentina as well, this has been a result of deep business engineering and expansion programs.

Colombia, Central America, and the rest of our Latin central division continued to post excellent results, as well as other countries in our Latin [Indiscernible] division. These extraordinary results are a consequence of the hard work of our teams and focus to continue capturing the opportunities generated by the market.

We're simplifying our portfolio and implementing cost control initiatives in several countries to continue strengthening our profitability. Going forward, we will keep our focus on rebuilding and expanding our distribution to further strengthen our profitability in the region.

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 especially when we consider the tough comparison from the strong results in the first quarter of 2021, overall inflation, and the complicated operating environment in third world countries. Our late-phase reached historic levels for our first-quarter posting a nearly 18% growth.

On the other hand, our adjusted EBITDA margin contracted as expected, 70 basis points, mainly due to the heavier commodity prices and the high overall inflationary environment across our Europe. We will continue throughout the rest of the year.

We are working on several actions to offset the rising inflation including price increases, revenue growth finance [Indiscernible] strategies, our product mix, productivity initiatives, and we will continue to proactively look for restructuring opportunities across the different markets. Operating margin contracted 150 basis points, mainly due to the higher cost of sales and a higher inflationary environment globally, coupled with a lower non-cash benefit of $73 million related to the adjustment to the MEPPs liability to reflect current interest rate levels, which compares to the $109 million non-cash benefit that we had during the first quarter of 2021.

Excluding this MEPPs effect, operating income would have increased 13%. We have also achieved substantial and sustainable productivity savings coming from capital and restructuring investments we have made in the past, which enabled distribution efficiencies, our mentioned improvements, and integrated system solutions.

Our financing costs decreased by almost 8%, reflecting lower interest expenses. And our cumulative effective tax rate stood at 34%, which continues to reflect a benefit from our turnaround businesses which have been performing substantially better than the previous years.

As a result, the net effect of these factors yielded an improvement in net majority income of more than 10% and the margin contraction of 30 basis points to close at 4.8%. Our return on equity closed at our record levels of 15.8%.

Turning to our balance sheet. Thanks to our strong operating results.

We closed the quarter with a net debt to adjusted EBITDA ratio of 1.8 times our total depth declines by almost Ps 2 billion as compared to December 2021. This was partially due to the positive effect from the FX rate.

Our short-term debt decreased to 7% of the dollar as we have the outstanding $198 million bond which we paid in January. We gave proceeds of our committed revolving credit facility.

Our net operating working capital, which mainly considers accounts receivables, inventories, and suppliers, has improved significantly by 1.4 base over the first quarter of 2021. We achieved the equivalent to Ps 770 million, and this was mainly due to the improvement in accounts payables.

Now, going deeper on Daniel 's comment of commodity prices. Our main raw materials are wheat, packaging, and [Indiscernible].

As of the end of the first quarter, we have already hedged 85% of our needs for 2022, and we continue to do so according to our policy, which goes from four months to 18 months. This strategy is aimed at providing visibility to each operation in order for them to plan their commercial and pricing strategy on a timely basis.

I would like to talk now on our guidance and the Ricolino divestiture that we announced yesterday. This transaction strengthens our financial profile as it is highly accretive with an enterprise value-to-sales multiple of almost 2.7 times.

It enhances our long-term focus in our core capabilities. We will be using the proceeds to pay them back, for our CapEx plans, and other general corporate purposes.

We reaffirmed our commitment to Mexico, where we will be investing around $750 million during the year, a record level that endorses our confidence in the country. I will now update our guidance for 2022.

Without the effect of Ricolino, as according to the accounting standards, beginning in the second quarter, we will be adjusting 2021 results to make it comparable, by reporting the Ricolino results as a discontinued operation. Thanks to the strong top-line performance in the different markets in which we operate, we are upgrading our initial guidance from a high single-digit to a low double-digit growth.

Considering these affected top-line growth and the high inflationary environment that we're facing, we maintain the range of adjusted EBITDA at mid to high single-digit. So, as you can see, we still expect to see some margin pressure in 2022, as we shared with you in the previous quarter.

In terms of our expectation for the effective tax rate, there is no change to our guidance. And we continue to expect a low to mid 30 effective tax rate.

As you can see, despite the inflationary environment, we continue to see a strong 2022 as our volumes and sales continue to exceed our expectations. Our CapEx plan is ramping off.

We continue to expect around $1.5 billion from the year. Although the first quarter looks lower, this is because it takes time for some projects to mature.

And also, we have been facing some delays from suppliers related to the global supply chain disruptions that are happening. We continue to be fully committed to the opportunity to increase our capacity given the ongoing high demand for our products.

I hope this was clear and we can now proceed with the Q&A session.

Hi than the ins Diego. Thanks for taking my questions and congrats on the outstanding results suggest reported.

A few questions for my side. The first one I guess more for Diego on the guidance that you just percentage, just wonder if you could give us a little bit more detail on the expect to margin pressure, I understand your well-hedged for this year, so I guess relative to your expectation three months ago when you were kind of spec in kind of flattish margins, just wondering, where are those fresh, additional precious coming from versus your initial?

Is it on the labor side and the freight side, the perhaps are not as hedged as you are in the commodity say, or even on the commodity side, perhaps towards the end of the yield’s awareness hedge? And perhaps you know, the sharp price increases we're seeing now you'll start seeing the effect that's so that will be my first question just to get a sense of that.

And then also, I guess a related question is whether your updated guidance assumes any additional price increase as beyond what you are ready have put in place, and if so, just to get a sense of which regions your field you need to do a little bit more.

Yes. Hi, Ben.

I will probably take the first part of the question and probably, Alfred Penny, if it's okay for you, you can take the pricing part. Regarding the guidance, as you can see, our top-line has been a roll of our initial expectation.

But also, inflation has been or will be higher than what we were expecting some months ago. Particularly with the Russia - Ukraine conflict, you know that all commodities have gone up.

So today, the expectation of the cost of sales it's higher than what we had a couple of months ago, and that's why we're maintaining the EBITDA expectation in natural terms, higher revenues and, of course, as likely higher contraction in mergers. And so that's the main effect, Ben, and what changes the actual price of commodities.

Diego, I'd be happy to take the pricing question, at least from a North America perspective. We're in the process of -- Ben, we're in the process of implementing another round of pricing given the, what I would call, extraordinary runoff in many of our input costs.

And I think it's important to note that not all of our input costs are hedge able, if you will. And so, in some cases, we're seeing significant run-ups in the short-term that we're going to have to deal with in the back half of the year.

In addition to that beyond the pricing, I would say that we're aggressively going after any and all productivity opportunities, mix management, revenue growth management, I think Daniel and Diego mentioned it. So, we're looking at everything.

But I do think it's important to know that the inflation pressures are across the board and they're not limited to just commodities, and we've got to continue to manage through that as, I think so far, we've pretty effectively done.

Great. Thanks a lot.

And how about the other regions, in particular Mexico? You've been very successful on the pricing side.

And we heard some comments this morning that arm is looking to reach a deal with private companies to limit price increases for basic guidance not rolling out price controls in the future. Just wondering if you could comment on that.

Have you been part of those discussions? Any thought about -- and any thoughts about that?

And how would you approach pricing initiatives in Mexico?

Daniel, do you want to take that one?

Sorry. Someone caught me in the phone line, I'm back.

Don't have the question, please, could you repeat it?

Sure. Yes, I mean, after the comments you guys made about U.S.

pricing, I was just wondering about pricing in Mexico, which has been quite strong. But given just thinking about going forward, what's the thought about that, especially given what [Indiscernible] mentioned recently about discussing with private companies some limitations on price increases, etc.

Any thoughts about that, whether you've been on those conversations. And how should we think about pricing in this environment in Mexico particularly?

Yes. Thank you very much.

I think I'll try to answer it in two parts. The first part is that we've been able to price according to the cost increases that we have had in our B&M so far.

And the reaction in terms of the consumer reaction to our prices has been relatively good and we've been able to manage these past price increases. Regarding the future, we have been talking with the government in a very preliminary way in understanding what are the things that they want to accomplish in this new scheme and that it's going to be detailed and finished in the coming days or weeks.

And they are concerned on 24 basic commodities. One of the products that they're looking towards, trying to see how it can be impacted in a lesser way to consumers is the and breadth though the white bread and this is something that we are just starting in conversations with the government.

So, we don't know very much about it and we are worth for PC phasing has fully other companies been united to talk with our government, and we'll see what comes, what comes next. But I just wanted to mention it.

Concern of one of the products that we have, not the Fool line of items in our company.

Great that's great detailed. Could you remind us how much, roughly speaking is wide breadth as a percentage of sales in Mexico?

We don't we don't be specifically phase on our products. It's a relevant product, asset quality in the portfolio.

It's a lot of [Indiscernible]

Okay, great. And my last question, you're switching to Ricolino.

I know you guys mentioned that the use of proceeds paying down debt and I guess CapEx and others issues on I guess the big question on investors mind is also distribution to shareholders so anything you can comment about potentially using part of it as special dividend or perhaps increasing the amount of the buyback, but could come after you received those proceeds.

You want to take that vehicle?

Yes, sure. If -- as we have mentioned, we will be using the proceeds to pay down debt, which has mainly thrown back nine facilities as we have outstanding as of the end of the first-quarter.

As part of the other generate corporate purposes. If it's still early to tell, but definitely we will use some of the cash to form the buyback program.

And closer to the [Indiscernible] on being able to conclude this transaction, we will have clarity if there is potential dividend to repay.

Excellent. Thanks a lot guy for your answer saying congratulating on the [Indiscernible]

Our -- as they were mentioned, we'll be on lowering our debt. Basically, that's going to be the main [Indiscernible].

Great, thanks a lot guy.

Perfect. Thank you very much.

Daniel, Diego, congrats on the results. Two quick ones.

Just wanted to ask you if you could elaborate a little bit on what you've been doing, particularly in Mexico to bring the SG&A cost down so significantly in contrast to what sales growth was? So just to understand what initiatives you've been doing, particularly in the first quarter and how much more room you have for the remainder of the year.

Also, in light of all the gross margin pressure you're obviously seeing and your kind of implying within your guidance, but just to understand the magnitude of savings you might have on the SG&A side? That will be my first question.

Well, on a very general matter, let me tell you that the growth in volume and sales allows us to leverage significantly our fixed cost in the business. And that's in general terms what we have been facing.

We have been implementing over the past years a lot of changes in the digital side. We have better tools now in disposition for our sales team, and we're always tweaking on how we can be more productive at the distribution and on targeting our accounts, especially the small ones.

But all in all, it's been a good quarter and the company is working at the high level of capacity with inflation.

Okay. Perfect.

And then I know you don't give too many details but just maybe conceptually, can you talk about the level of profitability the Ricolino business used to be? Was that in line with just the general Mexico level of profitability?

Was it a bit higher? Was it a bit lower?

Just to understand as well around that context what profitability might look like going forward just given the fact that you're now going to deal with -- treat it as a discontinued operation.

Diego, then for the time being?

Yes. Yes.

Ben, this information is currently not public, and we have to comply with our confidentiality agreements. So unfortunately, we're not able to provide any color on the margins or any more details on Ricolino for the time being.

Once that we close the transaction, we will share more detailed information.

Just to understand, when do you expect this to close?

Between the third and the fourth quarter once we have the approval of the Antitrust in Mexico.

Okay. Perfect.

That's all. Thank you very much and congrats again.

Hi, everyone. Thanks for the call.

A couple of questions. Follow-up on the very strong top-line, particularly in Mexico.

You mentioned double-digit growth across all channels, but is there one channel that is standing out or maybe a category or even tricategory mix improvement? I ask this also because of Ricolino.

I don't know what level of impact that higher confectionery items could have had in your mix. So, any more qualitative color on the Mexico top-line performance would be helpful.

On the top-line performance in the U.S., just wondering from the comments that you've made before, that you are, as we speak, implementing pricing or higher prices already, if you are concerned at all with potential consumer elasticity, if that's -- demand destruction or disruption is a concern going forward. Appreciate the time.

Thank you.

I mean just very broadly I would say that the food service is part of our business as the economy recoups. It's [Indiscernible] under the COVID effects allowed people to move freely.

Has been the winter, as well as the convenience store sectors. Those will be the two that are growing the fastest.

And also, the prepaid goods have been very good so far for us.

On the [Indiscernible]

Take it, Alfred

Yeah, I'll take it, Ricardo. Thanks for the question.

To-date we've not seen any significant elasticity impacts from the pricing actions we've had to put into the market. I will say that the additional pricing we're being forced to take now given the significant inflation is a watch out, and we're monitoring that.

And we will be monitoring closely by category for potential impacts, and if we see that, we're going to have to react. But so far, overall, I would say across our categories our top-line has held up fairly well.

Obviously, the consumers are feeling very pressured on inflation across the board. Whether it'd be gasoline or would cost etc.

So, I think like many companies, we're going to have to monitor it closely there to deal with what we have to.

Thanks so much.

Hi, Diego, Daniel. Thanks for the space for questions.

My first question is on Ricolino, and congrats on the deal. I was wondering, and it has to do with what you plan to do with what's your capital.

I was just wondering Diego, if you could remind us what your target leverage might be. I think you've mentioned two times in the past, but I was wondering if you have any specific data point to share.

And my second question is on multi-employer pension plans. We've seen higher rates.

And I was just wondering if given this higher rate environment that there's a particular opportunity that you feel you can capitalize on in terms of taking some of these MEPPs early and taking them out at these levels. Thank you.

On the network on the leverage ratio. I mean, on the loan role, we are remaining on being between two to 2.5 times net debt to adjusted EBITDA.

In 2022. we expect to be within these targets, broadly slightly lower around Good Times.

Considering the inflow from the sale of my colleague. In your second question regarding the MEP Europe, you're completely right.

We have been a license for Genuities and in fact, we've taken opportunity in the first-quarter. We had an offset from the positive impact in [Indiscernible] and then just from the interest rate, it was offset by restructuring the plant [Indiscernible] more one is weeks for that's why you also we continue to have more than $70 million of positive effect on our results.

I will continue to monitor very closely the opportunities that we have in all the different mix plans.

That makes a lot of sense because the magnitude of interest rate increase would sort of implied a bigger MF inflow. So that makes a lot of sense.

Thanks for thanks for that color. Appreciate it.

Thank you.

Good afternoon. Thanks for taking my question.

A couple of questions. One of them regarding Ricolino as well.

The production and the distribution of Ricolino is separate from the rest of the Bimbo operations. Which other businesses do you have with separate production facilities and distribution?

I guess Barcel is one of them. Are there any other businesses that are non-core or not integral part of your production and distribution?

That would be the first question. And I guess the increased question there is, are you open to sell other businesses that are not part of your core?

Hi, Alan. It's -- what we have, it basically focuses on becoming a sole grain-based food company, a global one, and one that really takes the possibilities of our baking assets well as our sold snack’s assets better in the future.

So, when we were saying core, that's what we're talking about. And I know we don't have any assets.

We are not a conglomerate. We were not even a block food company operating in many categories.

We were just operating in three, and now we're laser-focused on two. And we think that we have now the -- this is something that we've been working on for years.

And I'm very glad that we were able to get out through the finish line in such a great manner in valuing this Mexican company in a way that first thing I believe it's the way that the Mexican food companies should be valued.

There's a super tremendous disparity in value between the multiples of the international companies and the ones based in Mexico. And I think that you might be able to register, to understand that the value that we were able to unlock basically attests the strength of our capabilities in distribution are stronger, clients that we've been able to develop and the connections that they have with our consumers.

This is a major step in the company and one that we're very happy and also sad because of [Indiscernible] that's being able to achieve these leaps. But it's a very well thought decision and one that really allow us now to increase our depth in the -- in this grain-based goods business very clearly.

Now, that makes a lot of sense and congratulations. I mean, you sold it for 2.6 times sales when your stock is trading at under one-time sales.

So definitely, you were able to go a fantastic protection, and yes, everybody can see that companies like Mondelez are trading at two times the EBITDA of multiple companies like Bimbo. So, well said, last question.

We're seeing a lot of global companies right now raising prices all across the board, in the beer space and the soft drink space. A double-digit basis and we're still seeing positive volumes.

In your experience, Daniel, how do you see this evolving? We're starting to see a lot of weakness in other -- in discretionary items and so forth.

But I guess the specific question is, have you seen this before, where you can -- where all of these staples’ companies are taking double-digit pricing and you're still seeing volumes growing? How long can it last and what are the different scenarios that you see for the next couple of years in your core -- in your business?

Right. Great question, Alan and let me tell you that I've been in this business or 40 years.

And this is something that I've never seen before. and yes, we have been in inflationary times.

We do business in companies that have different inflationary scenarios, and we're well accustomed to navigating through them, but this is quite special because it's mostly global, and we're navigating through new times. It feels that demand is pretty high, and it might cool off, but so far, we're seeing that it's mostly, there are pockets in places that are not I would say an active as others.

But this is a new territory for some and we're asking our teams to be very close to the market and to prepare and to react as best as they can.

That's very useful and it's consistent with what -- what we're seeing also in good five. Thank you so much for taking the questions and again congratulations on the results and on the transaction with recalling.

Thank you.

Thank you, Alan.

Yes. Good evening.

Daniel and Diego congrats on another set of for salts and obviously on the transaction. So, my first question relates to the transaction.

I imagine Ricolino was still coming out of a pandemic. Right.

Its categories are slightly more discretionary than others that you have. So, I imagine that sales may have still been a little bit depressed.

I'm just wondering if the 500 million that was reported sales for [Indiscernible]. Does that reflect the normalized sales number or was that still a depressed number?

Yes, we were very much hit during the first year of COVID with Ricolino. We started to see a rebound last year.

And the business was performing very good in -- I will say on all aspects of the P&L lately. So, it's a business that's doing very, very, very well.

And that's -- that will be my comment.

Okay. But any comment on whether the 500 was a normalized number or simply a trailing number?

Diego, I think it's -- I think that's last year, right?

Yes, that's a number for 2021, Daniel. And, Felipe, yes, that -- we could say it's a normalized number.

It was even better than 2019. And of course, very, very high as compared to 2020.

And it includes -- mostly, the revenues are in Mexico, but there's a percentage of those revenues that occurred in the other geographies, just so you know.

That gives us a lot of color knowing that it was above 2019. So, it's fairly recovered at this point.

Maybe another one in Latin America. This is the third quarter of accelerating sales in neutral FX terms in these two regions.

So very, very strong results in those two. But obviously, the results of M&A impacted those.

Just wondering how that trend has been if you exclude the inorganic portion. Does it look as strong or is there -- is the trend still accelerating?

I guess is a better question.

You have the number [Indiscernible] on the impact of the acquisition? I don't think it's very relevant, right?

If they didn't deliver to London, I don't have the numbers here.

Okay. That's not a problem.

If it's not very relevant it doesn't change the numbers very much. And then maybe my last one, are you guys -- and it's probably more directed to Fred.

Fred, obviously a lot of companies are trying to push through price increases in the U.S., and there's a history that maybe doesn't apply to [Indiscernible], it has applied to other companies in the sector at different points in time. There has been points where the retailers have kind of pushed back a little on price increases.

So, just wondering if you can give us some color on how retailers are accepting this wave of price increases from everyone, obviously, it's not just Bimbo.

Well, I guess I'd say that everyone in business is experiencing fairly extraordinary inflation pressures and labor issues, etc., that are fairly well documented. So, I think the markets and the retailers recognize the pressures that we're facing because they're facing the same ones.

Now, to my earlier comment, we're putting in other pricing into the market in the near-term here. But we have to.

And hopefully we're going to be able to execute that effectively. But I think in general so far, I think the markets have recognized the need to deal with the extraordinary inflation pressures that we're all facing.

And so, we'll see how it goes on the next round. But so far, I think the markets have been receptive.

Now. Thanks a lot, great call on that and congrats again, guys on the transaction.

Felipe just very quickly, let me go luck to question regarding the normalized revenues of frequently with call it. Just to give you a little bit more color.

2021 was substantially higher than 2019 will report on mainly gross order number that we put out on the curve release on these $500 million into the highest global on say, towards already has no negative effects from the pandemic

Yes, that's exactly where I was going with that, I just wanted to to make sure we could say very definitively that it was an excellent multiple and it definitely is so congrats again, guys.

Hi. Thank you for taking my questions.

Most of them have actually been answered already, so I just wanted to make two follow ups. One in terms of the working capital, especially had an improvement.

So, I was just wondering if you continue to see this trend throughout the year, or how should we be thinking about working capital needs for the remainder of 2022. And then the second question, on your capital structure, I understand that very soon the proceeds to repay debt, just trying to think about which parts of the -- of your amortization structure will be more focused on, if there's any particular instrument that you're intending to retire.

Thank you.

Hi, Barbara. Regarding the working capital, it has continued to improve.

I think there's still room for improvement, not as big as the one that we have seen in the last three years. As you know, we implemented a lot of supply chain finance programs, including North America, which was very big and created a very strong positive effect on our working capital.

We're implementing best practices in the different geographies, particularly Latin America, for improving the way we do the collection. Today we do not really focus on optimizing the level of inventory because of some supply chain disruptions that we have been facing.

So, we'll probably take in a little more cautious position in terms of inventory. So, we do not expect a big improvement on this line for 2022.

In the first quarter, just to remind you, we typically burn a little bit of cash from working capital because every fourth quarter is when we see the strongest jump on accounts payable. So, we feel optimistic about the potential, but again, not as material as it was in the past two, three years.

Regarding your second question on the instruments that we plan to prepay, once we get the resources from the Ricolino transaction. So, it’s mainly bank facilities.

As of the end of the first quarter, we have close to $400 million of debt from bank facilities including the revolving credit facility and some other debt at the subsidiary level. It's not necessarily that we're going to be paying a 100% of these.

But mainly whatever we use of the proceeds to pay down debt is going to be bank facility.

Perfect thank you so much.

Yes hi. Daniel, Diego and Fred, thanks for taking my question.

My question is, going back to the transaction and more on a strategic point of view, is it fair to say that there may be a strategic pivot to perhaps strengthening the core categories. I mean Daniel, you talked about this in detail, and when you put together the divestiture of Ricolino and the CapEx program this year, that's a lot higher than previous years.

That would make sense, but just wondering if the growth that came, that was led by M&A from the past, is that a strategy that you would put to rest for the time being? Or if you could discuss any color around that.

Yes. Thank you.

I have read some of the comments that you and others in the call have written. And there's this always -- I see this question lingering on the M&A strategy of the past.

And I want to maybe spend some time to give you a little bit more of light because I personally believe that the analyst community is not necessarily looking from the angle that I see it or that I believe you should see it. And this is an important question.

First, I have to tell you that what we did in the past was done in order to pursue a very clear strategy of taking advantage of the fragmented market whereby we could by putting up some rather large acquisitions, we could consolidate our market position in the U.S. and then afterwards in some other countries by making these acquisitions that were quite large compared to our size then.

I'd give a sense that that this is in our blood. I mean, it's not in our [Indiscernible], it's because we have thought about them very weekly.

And they allow us to be where we are and not the, we did these acquisitions. We have to work tirelessly years and years and years to fix ailing businesses, to reinvest in bakeries that has not been invested in many years.

And to pick distribution systems that were out motive for well, not taking care of. And then that's planes the essence of Grupo being Grupo Bimbo is a company that always has it's I will say, goals very clearly.

And that has a long term [Indiscernible] on how to develop the markets where we -- were, we are in. We play for the long-haul that you don't like the long-haul well, that's were we are, but we're very very clear on what we want to achieve and we want to create value for shareholders and these big acquisitions happen.

What we find then is the there are many opportunities for inorganic growth. But they are smaller in sight from what they were before.

And that's what we are -- We continue to be active in the market as we have seen in the past year, and we will look at a lot of opportunity in front of [Indiscernible]. If they [Indiscernible] with our strategy, if they are -- if they provide us growth in the future or strong synergies, we will look more [Indiscernible].

I understand that. Thank you, Daniel.

That's clear and I guess it appears right now you are in the phase of us more on the fixing of the businesses than the distribution systems, as you mentioned. And along this line, I just wanted to ask my follow-up.

In Brazil and the broader LatAm business, very nice turnaround there. Any comment on short-term gains that you are seeing today and perhaps some longer-term opportunities that remain in LatAm?

Latam, as you know, Sergio, it's a very volatile region. We have leaped through many ups and downs.

And we -- what you saw this quarter is exceptional and we're working on improving our performance in all markets and regions. We're investing heavily there as well in CapEx.

And the opportunities are there. But I have to tell you that having a leap through this region, we might see some more like Philippe coming on from the region.

But we're much better prepared than where we were before.

Understood. Thanks very much, Daniel.

Thank you, Sergio.

Hi guys good afternoon. Thanks for taking my question.

And again, congratulations on the results. I think most of them have also been answered.

I would just pick a brain as to -- I mean, the uptick in your sales guidance for this year, given all that you've mentioned throughout the call, appears to be more from the side of stronger volumes, especially in Mexico and in the U.S. Do you agree with that with that one, and can you see that changing or evolving through the year as you implement more pricing?

Thank you.

Will you take that Diego?

Yes, hi, Luis. I'm saying not only for Mexico, Luis.

For all the different regions, the guidance that we provided is based on the combination of volume growth together with price increases. And I mean, seeing the environment that we're living, we feel confident that we're going to be able to achieve this upgraded guidance.

Correct. So specifically, the question is, compared to the previous guidances, taking what we saw in the first quarter, we're probably seeing a bit more, I would say, down of defensive is a word, or robust volumes that probably you anticipated in the previous guidance.

Is that a correct assumption?

It is a correct assumption --

Perfect. Thanks, and congrats again.

-- both volumes have passed our expectation and that's why we were able to deliver almost the 18% growth in the top-line in the first quarter.

Yeah. Perfect.

Thanks, Diego.

Well, thank you very much for I would say a very likely and rather long session. I hope that you've highlighted in directing, redeem them.

As always, we're happy to entertain any comments or questions you might have with our Investor Relations team. And hoping to see you soon thank you very much.