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Good morning, and welcome to the Sigma Foods First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. A replay will be available on Sigma Foods Investor Relations website later today. I will now turn the call over to Hernan Lozano, Sigma Foods IRO.

Thank you, operator, and good morning to everyone joining us today. Further details regarding our first quarter results can be found in our press release and earnings presentation that were distributed yesterday. Both documents are available in the Investor Relations section of our website. Before we begin, please note that today's discussion will include forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results may differ materially. Sigma Foods undertakes no obligation to update these statements.

It is my pleasure to participate in today's call together with Rodrigo Fernandez, Chief Executive Officer; and Roberto Olivares, Chief Financial Officer. Our agenda today is straightforward. Rodrigo will begin with a strategic and operational overview of the quarter. Roberto will then review our financial performance in more detail, and we will conclude with a Q&A session.

With that, I'll turn the call over to Rodrigo.

Thank you, Hernan, and good morning, everyone.

2026 started on a strong note with record first quarter volume and revenues as well as the second highest comparable EBITDA for the period. Results were supported by disciplined execution, early signs of improvement in certain raw materials and stronger currencies benefiting our operations outside the U.S.

Sigma operates from a position of financial strength. Our investment-grade balance sheet has no material debt obligations over the next 2 years as we proactively refinance those maturities through a successful issuance of the local notes during the first quarter. From a capital allocation perspective, we recently held our first Annual Ordinary Shareholders Meeting at Sigma Foods, where shareholders approved total cash dividends of $150 million for 2026.

This reflects our strong cash generation, which supports our balanced approach to drive growth while returning capital to our stockholders. Disciplined investment in high-return strategic projects is fundamental to continue growing our core.

Let me highlight several key developments on this front. In Mexico, we continue expanding yogurt capacity to meet strong demand. Our yogurt team has done an outstanding job recently climbing to the #1 position of this product category nationwide.

In the United States, we're advancing the expansion of our cheese operations in California, supporting the continued growth of our Hispanic brands as they gain traction in mainstream channels. In Europe, we're encouraged by the steady improvement in profitability and the progress of our capacity recovery in Spain. The expansion of La Bureba facility is almost complete and our new packaged meats plant in Valencia is on track to start operations in 2027.

Both projects are key to restoring lost capacity and further strengthening our competitive position through efficiencies. Turning briefly to the global macro environment. Conditions remain fluid given the broad effects of the ongoing conflict in Iran. The recent spike in oil prices increases uncertainty and pressure for consumers across many markets. We are actively managing to mitigate short-term headwinds related to energy, plastic packaging and transportation, among others.

At the same time, we're encouraged by positive external developments around meat, raw material cost and foreign exchange trends. Combined with the diversification and scale of our operations, these factors provide flexibility as well as we navigate the current environment. Overall, the balance of external headwinds and tailwinds remain supportive of our 2026 guidance, which remains unchanged.

With that, I will now turn the call over to Roberto for a more detailed review of our first quarter financial results.

Thank you, Rodrigo, and good morning, everyone.

Our consolidated results reflect solid execution, complemented by a favorable currency translation effect. Total revenues increased 13% year-on-year.

Supported by volume growth and higher average prices in Mexico, Europe and Latin America. Similarly, comparable EBITDA increased 18% year-on-year, driven by robust growth in Mexico, Europe and LatAm.

Regarding performance by region. Mexico was a standout once again this quarter, delivering record first quarter volume, revenues and EBITDA. Growth was mainly driven by strong results in the dairy category across all channels as well as solid packaged meat performance in proximity retail channels.

By brand segment, our value-oriented brands continued to grow at a higher pace than the rest of the portfolio. Europe delivered solid progress with volume increasing 4%, supported by double-digit growth in the fresh meat business, which benefited from temporarily lower live hog prices in Spain.

EBITDA was $25 million, marking Sigma Europe's highest first quarter figure since 2021. Regarding the Torrente plant floating insurance, let me remind you that we received 2 types of reimbursements, property damage and business interruption. During first Q '26, we received reimbursements exclusively related to business interruption, which replicate the plant's operation and therefore, are considered part of our operating results.

Only property damage reimbursements are considered extraordinary items for purposes of comparable EBITDA. For the avoidance of doubt, we did not receive any property damage reimbursements in first Q '26. On the strategic front, we continue advancing to obtain regulatory approval for the previously announced fresh meat transaction in Spain as soon as possible.

In the United States, the consumer environment remains softer relative to other regions. Yet continued progress in Hispanic brands across mainstream channels helped offset lower demand in national brands. Sequential improvements in volume, revenues and EBITDA were in line with expectations as pricing actions continue to better align with cost. We expect this trend to accelerate in the second quarter as seasonal effect kicks in.

Latin America continued its positive trend recovery trend, delivering year-over-year growth in volume, revenues and EBITDA, supported by ongoing operational initiatives and improved execution. Turning to the balance sheet. We continued strengthening our debt profile during the first quarter, successfully issuing approximately $580 million in local notes and extending our average tenure to 8 years by refinancing short-term term maturities.

These notes received the highest local credit ratings from Fitch and Moody's and attractive demand of roughly 3x the initial target.

We benefit from a diversified financial structure that provides flexibility to meet our funding needs across different currencies, maturities and credit instruments. Net debt totaled $2.8 billion at the close of the first quarter, up $127 million year-to-date. The increase was mainly driven by higher net working capital, reflecting supplier payments related to year-end CapEx projects and seasonal inventory investments.

Importantly, net working capital investments was 18% lower compared with the first quarter of 2025. Regarding leverage, our net debt-to-EBITDA ratio ended the quarter slightly above our long-term target of 2.5x, reflecting the previously discussed working capital dynamics.

This concludes our prepared remarks. I will now turn the call back to Hernan for Q&A. Hernan?

Thank you, Roberto. [Operator Instructions] We will now open the line for questions. Operator, please.

[Operator Instructions] Our first question comes from Fernando Olvera of Bank of America.

Keeping this to one question, I want to ask you, I mean, based on the volatility of whole prices that you highlight in the initial remarks, can you give us some color of the potential impact that this could have on margins and how relevant are from your cost structure, the freight cost?

Fernando, this is Roberto. Thank you for your question. Regarding the Iran conflict and the potential and the impact that it has on the market, the potential effect will depend on the conflict duration. Yes, we have some exposure to -- in some categories, particularly in the packaging category. So we have some plastic packaging. We have the freight costs as well as some utilities.

In regards to utilities, particularly in Europe, where we are seeing that the markets are -- have more volatility, we're mostly hedged for the year. We have around 80% of the utilities hedged in Europe. And in regards of the other categories, the impact so how that we have seen has been manageable through other efficiencies and initiatives within the company.

Let me just put this into relative context. We are seeing as well favorable raw material dynamics, particularly in the Turkey segment as well as fresh field. And also the FX has continued to help during this year.

So we do not expect any material impact coming from the conflict. And as we mentioned, we remain confident to reach our guidance for the year.

Our next question comes from Enrique Maguero of Morgan Stanley.

My question will be on Mexico EBITDA margins. We were a bit surprised to see a margin decline in Mexico this quarter, given the current Mexican peso level and the raw material benefits you just mentioned as well.

So on that matter, if you could just dive a little bit deeper on the drivers behind this margin decline in Mexico. It would be very helpful. So for instance, if you saw any tailwinds from the stronger Mexico peso this quarter, if you should -- maybe if we should see that only later on, any relevant raw material or SG&A components this quarter as well?

And still on Mexico margin, if you could comment on how you're seeing the latest developments on raw materials? And how does that affect your initial expectations on Mexico profitability for the year as well would be very helpful.

Let me start and then Roberto can complement. We see Mexico very strong. And something important to mention is that dairy has been growing at a higher pace and the margins between dairy and packaged meats, both are very positive, but there is a mixed part on that. And if you want to complement, Roberto?

Yes, sure. And not only will be a mix in categories, but also in brands, we have been seeing value brands growing a little bit more than premium and mainstream brands. So that will also have an effect on mix.

On the part of raw materials, as we have mentioned, we have seen particularly since the start of the year, Turkey bad decreasing sooner than we expected. And positively, we've recently seen Turkey ties start to move. In the last couple of years, the market of Turkey tie has decreased so far MXN 0.02, but it's signaling that we do expect the Turkey market to decrease in the coming months. That will -- particularly Turkey will potentially have a benefit in COGS.

We, as always, will take a more balanced approach in terms of margin and volume. We want to incentivize volume. So particularly this year, as we're seeing the consumer a little bit softer than in previous years.

So we will take a balanced approach to see how much of that potential improvement in COGS will be go up down to the margin.

Let me just give a quick clarification about the tie price increase. This is a very recent development over the last couple of days.

Correct.

Our next question comes from Froylán Méndez Solther of JPMorgan.

Is there anything that makes the first quarter in terms of margins and cash generation seasonally weaker versus the rest of the year? Because my question comes because if we extrapolate the margin performance seen in the first quarter, it would be hard to think that guidance is achievable.

And my second question, if I may, you mentioned improved penetration of Hispanic cheese in the mainstream channels. Should this be margin accretive? Are you able to price Hispanic products in the mainstream channel as, let's say, more premium product that should command a higher margin?

Let me just very briefly start that we do see a good start of the year. And as Roberto mentioned, we're actively managing to mitigate impacts from the conflict, so that shouldn't be a problem. We do see lower raw materials cost going forward.

We do see favorable FX trends within the geographies. We do see by the end of the quarter, positive strength within each one of the geographies. So with that, we feel comfortable with the 2026 guidance.

And I will only complement for that there's usually a seasonality effect in terms of EBITDA generation, particularly coming from the U.S. and Europe during the second quarter is a stronger quarter for the U.S. And as the year advances, Europe generates more -- generally more EBITDA.

In particular in the fourth quarter, it's a very strong quarter for Europe. So yes, there is a seasonal effect on EBITDA. As we have mentioned, the $260 million that we delivered during first Q is in line with what we expected for the first Q and what we are seeing, as Rodrigo mentioned, will be to very align or aligned with our guidance.

In terms of -- you also mentioned cash generation, there's usually more investment in net working capital during the first quarter that has to do with either CapEx payments of projects that were approved in the fourth quarter of last year and seasonal investment in inventories that we do expect that investment in net working capital to normalize a little bit through the year.

And regarding Hispanic...

I would say that the margins are -- I don't think that you will see a change in the mix by Hispanic [ press ] or Hispanic cheese compared to packaged meats. At the same time, I would say that as of today, we have a very good position on the unitary margin on packaged meats in the U.S. in anticipation of the seasonal demand, including the bulk of this year. So we feel very comfortable with the margins going forward.

Our next question comes from Ulin Sarawate from Santander.

I think it's -- you partially mentioned this in the previous question, but I wanted to get maybe some more thoughts there on the working capital dynamics, maybe understand a bit more where these investments and where this pressure that we saw in the quarter was coming from. And just to understand also going forward, Roberto, you alluded obviously to some seasonal effects there as well, the first quarter being a bit more heavy or loaded there on the investments on working capital.

So just to understand if this is something specific to this year and how you're thinking about it? Or is this kind of the run rate that we should think about for the following years kind of model-wise?

I'll let Roberto talk about seasonality, but let me start just commenting on the part of inventory within working capital. We found a couple of good opportunities to secure some Turkey and some beef for both the retail on the side of Turkey and for be for the food service during last year.

So we have more inventories at the beginning of the year. That will translate -- definitely, we're in a better position, but that would translate that during the year, we might be buying a little less on that, especially more on the Turkey's more breast more than the Turkey type.

So again, that will allow -- that leaves us today with a little more inventory, but with good prices. And during the year, we should buy a little less of that. And by the middle of the year, end of the year, we should be lining [ gap ]

And just to complement, Rodrigo, Luis, in general, the working capital has a seasonality effect. Usually, it is similar to what Rodrigo mentioned during the first quarter, we built up some inventory because usually prices of raw materials are higher in summer because of supply.

I'm talking specifically about, for example, pork, pork during summer usually is higher because of the weather and that makes the pigs to gain less weight and that implies less kilos of supply, et cetera. So you should see this dynamic usually through the year, and we will delever net working capital by the end of the year.

In terms of this particular investment for the first quarter, as Rodrigo mentioned, there's this investment in inventory as well as payments that we did regarding CapEx of projects that we approved at the end of last quarter.

And you will see that number to normalize through the year.

Thank you very much for your question. And I think we can move on to a question that we got from our chat from the webcast. And this is from Vanessa Quiroga asking about any changes in consumer behavior we have identified in the U.S. or Europe resulting from rising inflation recently.

Thank you, Vanessa. So in general, if you see -- I mean, I will talk about 2 different markets, the U.S. and Europe. Let me first approach the U.S. If you see the consumer sentiment in the U.S. is the softest that we've seen relative to other regions. And also within the U.S., I think it's record low in many, many years.

That has exacerbated with the gasoline prices recently increasing in the U.S. and all that dynamics. In terms of what we are seeing with our consumer stories, the U.S. consumer is taking more -- much more affordability approach to grocery shopping and that is -- I mean, moving the dynamics of the market, we have been following those dynamics and trying to change our strategy as the consumer changes.

I think we're well positioned with our brand portfolio to take over a lot of the consumption of our categories. if the consumer or as the consumer trade down within our categories. Our biggest brand in the U.S., Bar-S is positioned as a smart choice more on the mainstream to value segment of the consumers.

In regards of the U.S., I would say -- in regards of Europe, I'm sorry, I will say a little bit different particularly last year and through the beginning of this year, we have not seen as much inflation yet.

I mean, obviously, this conflict with Iran will and depending on the duration will potentially change that. But actually, branded volume growth has consistently grown in Europe, and that is a signal for us that consumers in Europe are not necessarily that focused on affordability and more focus on the value that they receive from the products. So we see different dynamics in both regions.

And just important to complement, if you see the categories where we participate, it's a great [indiscernible] quality at a very good price. So we should be in a good position within the categories where we participate in those geographies.

[Operator Instructions] We got a follow-up question of Fernando Olvera of Bank of America.

Sorry, I was muted. Can you hear me now? Yes, right?

Yes. Perfect Fernando.

Now I have just 2 quick ones. The first one is if you can explain the higher tax rate that we are seeing in this quarter? And what should we expect in the quarters ahead? And the other one is if you have any update regarding the Grupo GAL transaction in Europe.

Fernando. This is Roberto. Yes, regarding the tax rate, first, let me say that first Q tax rate is not representative of the annual tax rate as there is some volatility from quarter-to-quarter. Factors behind this volatility may include the FX and some other adjustments, particularly labor liabilities and others.

The income taxes are comprised of incurred taxes and deferred taxes. Let me first start with the incurred tax and the incurred tax of the operation reflects a lower rate, which is very aligned with the statutory rates. This quarter, we have a deferred tax effect that we recognize, and that is the one that is raising the implied rate to the figure.

And that deferred tax is related to a labor liability change that was the effect of the end of ALFA's transformation process.

And regarding the update on the fresh meat transaction with Grupo GAL, we are advancing. We actually are moving forward in the process of -- with the competition authorities. We were seeing the transaction to closes to soon.

It has taken a little bit more time, not because there has been anything related to the process, but just because of the time the transaction was reviewed by the competition authorities. We do expect to close hopefully during the second quarter of this year.

Okay. Great. Roberto, regarding what you mentioned about labor liability, I mean, is it something that we can see in coming quarters or it was just this quarter?

No, no. Thank you, Yes, it was a nonrecurring effect. So we do not expect that to see in the coming quarters. We do expect the tax rate to lower in the coming quarters -- the implied tax rate to lower in the coming quarters.

Our next question is a follow-up from Froylan Mendez Solther of JPMorgan.

Could you help us just frame how has the reaction of the consumer been so far in Mexico? I remember you saying that part of the benefits from raw materials would be translated into the consumer, probably being a little bit more promotional, more strategic given the health of the consumer.

But how would you frame the consumption environment and the reaction of the consumer in Mexico versus your original expectations?

First, let me say that -- I mean, if you see volume in Mexico is increasing around 2%, and that has more to do with the retail channels than the foodservice channel. And within retail, particularly dairy is increasing mid- to high single digits versus packaged goods.

In general, we're seeing good dynamics in most of our categories where continue improving the position of our brands with consumers. As Rodrigo mentioned in his initial remarks, for example, in the case of yogurt, we are now the #1 player in the yogurt category, and that has to do a lot with our portfolio and that consumers are preferring our brand and our products.

In regards to other dairy categories, cheese, particularly coming from value-added cheeses, slice and shredded cheese, and that has also helped us capture more clients. And in the case of packaged meats, particularly those segments that are more value segments and those regarding to specific needs.

For example, everything that is regarding grilling has increased a lot in Mexico recently. So we have take this careful approach of incentivizing volume, but also protecting margins as particularly as this very recent improvement in the tight market evolves, we do expect to continue looking into other ways to incentivize volume and also maintain margins.

And Froylan, I will just complement if you see the unitary EBITDA in Mexico, we have been able to maintain or even grow a little compared to last year. And we have done that with a lot of cost increments of raw materials.

So what we're thinking going forward is that balance between maintaining our unitary margins that are very important to make sure that the short-term results are there. But at the same time, the volume that will allow us to keep growing within the geographies.

And we do plan to maintain that balance between those 2. And hopefully, with that, we'll be able to keep giving good results in Mexico in the short, medium and long term.

Our next question comes from Felipe Ucros of Scotiabank.

Just a quick one on SG&A. Just wondering if there was any unusual seasonality for the quarter? Or do you expect any unusual seasonality throughout the year with your expenditure and marketing? And just wondering more or less what level of SG&A as a percentage of sales you guys are thinking about for the rest of the year?

Thank you, Felipe. This is Roberto. Yes, regarding SG&A, we don't necessarily see a lot of seasonality other than usually, S&A changes a little bit with sales mix. So whenever -- let me give you an example of Mexico.

So whenever there's changes even in the categories or the channel mix or even the region where in Mexico, there are some changes in SG&A as we're now selling a little bit more yogurt than relative to the other categories, particularly sales expenses are a little bit higher.

Even with that, yogurt margin has increased significantly in the last years due to a better mix coming from value-added products. But yes, there's some changes in SG&A regarding mix.

But seasonal effects not necessarily. So yes, Rodrigo.

And within marketing, Felipe, I would say that we have been -- we have a very strong position in all the markets we participate, but we still see that there might be opportunity to do things even better. We have been putting a lot of effort on the marketing side of the company.

We have a couple of good campaigns on the pipeline that should be coming out. In the long term, we definitely will be investing more money in marketing, but this is not something that is going to be radical. What we're seeing is pushing some new products that will be coming out of the market and gradually be spending more time on that, more money on that. So with that, the idea is to put some effort on campaigns that will also bring more volume and more margin and at the net of that should be positive.

But again, I don't think that it's going to be anything that will be outside of the [ gradually ] way of saying it. And with that, I don't think that you should see any spike or any change within market, even though as time goes by, we should be spending more on that side.

Okay. Great. So we should expect SG&A levels to be similar to the last 2, 3 quarters for the short term for the next couple of quarters?

Yes, correct.

There being no further questions, I would like to return the call to management.

Let me turn the call back to Rodrigo for a closing comment.

Thank you, Hernan. We're encouraged by the strong start of the year. These results underscore the resilience of our business model and a high-performing team. We remain focused on operational excellence to stay ahead of consumer needs and preferences in a dynamic environment. We greatly appreciate the continued support of our investors and business partners. We look forward to updating you next quarter.

Thank you all for your interest in Sigma Foods.

This concludes today's conference call. You may disconnect.