EARNINGS WEBCAST Todays Speakers Jos de Jess Valdez Jos Carlos - - PowerPoint PPT Presentation

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EARNINGS WEBCAST Todays Speakers Jos de Jess Valdez Jos Carlos - - PowerPoint PPT Presentation

Apr 11, 2024 184 likes •426 views

SECOND QUARTER 2020 EARNINGS WEBCAST Todays Speakers Jos de Jess Valdez Jos Carlos Pons Alejandro Elizondo CEO CFO IRO 2 Topics for Todays Webcast I. COVID-19 Update II. Financial Performance III. Long-term Growth Strategy

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SECOND QUARTER 2020 EARNINGS WEBCAST

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Today’s Speakers

Alejandro Elizondo IRO José Carlos Pons CFO José de Jesús Valdez CEO

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Topics for Today’s Webcast

I. COVID-19 Update II. Financial Performance

  • III. Long-term Growth Strategy
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Feedstock Prices Polyester Margins Operations Demand

  • Lower crude oil demand in Asia results in

historically low prices for Crude Oil and Px

  • Resulting in negative Inventory loss & RMCF

effects in 2Q20, with potential to revert in 3Q20

  • Solid demand and lower Asian PTA/PET output

improved margins (+13% QoQ)

  • Alpek’s businesses deemed as essential / No

adverse effect to operations

  • Increased safety measures for employees at

plants and home-office whenever possible

  • Strong PET volume, particularly due to emphasis
  • n hygiene and safety
  • EPS volume from Construction segment impacted

in Mexico, though rebounded in June + = +

COVID-19 Update

=

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2Q20 Financial Highlights

Strong Alpek performance QoQ best explained through Comparable EBITDA excluding RMCF result (US$149M / +1% QoQ) Polyester margins increased by 13% QoQ and Volume on record-setting pace (+4% YTD) but lower vs. 1Q20 record high (-6% QoQ) Temporary negative Inventory Adjustment (-US$42M) and Raw Material Carry- forward (-US$39M) effects in 2Q20 as feedstock prices fell to historical lows Focus on FCF as Net Debt reduced (-31% YoY) and CAPEX lowered (-61% YoY) US$81.6M dividend suspended, but open for review by Board of Directors in 2H20 Liquidity strength continues as cash balance improved (+7% QoQ) and US$1.4B in total credit lines were maintained

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140 161 194 167 111 74 188 148 189 172 110 167 217 231 173 147 149 1Q19 2Q19 356 127 3Q19 213 4Q19 1Q20 2Q20

  • Comp. EBITDA

Reported EBITDA

  • Comp. EBITDA
  • excl. RMCF1

+1.4% CoGen Sale

Alpek EBITDA (US$M)

EBITDA Evolution

(1) Raw Material Carry-forward

  • Comparable EBITDA excluding

RMCF1 of US$149M (+1% QoQ)

  • Quarter on quarter improvement

as stronger Polyester margins (+13%) more than offset lower volume (-6% QoQ)

  • Comparable EBITDA and

Reported EBITDA lower QoQ due to larger Inventory Losses & RMCF effects

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Feedstock Costs

Crude Oil, Px and Propylene all reached record lows in April/May 2020

Brent Crude Oil Price NA Paraxylene Contract Price NA Propylene Contract Price

1,165 1,077 955 937 876 590 500 1,000 1,500 2,000 4Q 3Q 1Q US$/Ton 2Q 1Q 2Q

  • 33%

38 37 38 35 31 26 5 10 15 20 25 30 35 40 1Q cpp 2Q 1Q 2Q 3Q 4Q

  • 16%

2019 2020 2019 2020 17 41 80 40 20 60 US$/Bbl 1Q 2Q 3Q 4Q 1Q 2Q 2019 2020

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EBITDA Breakdown

151 94 102 63 33 62 50 46 39 46 40 2Q20 Reported EBITDA Polyester 2Q20 Comparable EBITDA 2Q19 Comparable EBITDA

  • excl. RMCF

Inventory Adjustment RMCF1 74 110 1Q20 Comparable EBITDA

  • excl. RMCF

2Q20 Comparable EBITDA

  • excl. RMCF

P&C 42 6 Others Others 149 217 147 +1%

Alpek 2Q20 EBITDA (US$M)

(1) Raw Material Carry-forward

  • Polyester Comp. EBITDA excl.

RMCF of US$102M (+9% QOQ)

  • Negative RMCF & Inventory

Adjustment effects from Px and Propylene price decline

  • P&C Comp. EBITDA of US$46M

(-7% QoQ)

  • Strong PP margins, but volume

decrease from EPS (-19% QoQ)

  • One-time US$6M gain from

insurance payout related to 3Q18 fire at Altamira PTA facility

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Free Cash Flow Generation

185 127 51 101 42 163 53 NWC EBITDA 1,428 CAPEX Net Debt Dec’19 Financial Expenses Taxes Dividends Others Net Debt Jun’20 1,330 US$M FCF: US$118M

  • Alpek with emphasis on financial

stability and strong liquidity

  • FCF year-to-date of US$118M

(+US$189M vs. Guidance)

  • NWC +US$127M year-to-date

(+US$203M vs. Guidance)

  • CAPEX of US$42M (-61% YoY &
  • US92M vs. Guidance)
  • US$81.6M Dividend suspended

but open for review by Board of Directors

9

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Long-term Growth Strategy

  • Global Cost Improvement
  • Value-added Products
  • FCF Generation
  • Footprint Optimization
  • Value Chain Integration
  • Product Innovation
  • Maximize CCP Value
  • rPET Leadership
  • Recycling Promotion
  • Sustainable Product Portfolio

Growth Catalysts Strengthen Core Business Strategic & Focused Growth Foster Circular Economy

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2H20 OUTLOOK

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Q&A

José de Jesús Valdez CEO José Carlos Pons CFO

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APPENDIX

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Disclaimer

This presentation contains,

  • r

may be deemed to contain, “forward-looking statements”. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may

  • r may not occur in the future. The future results of Alpek, S.A.B. de C.V. and its

subsidiaries may differ from the results expressed in, or implied by the forward- looking statements set out herein, possibly to a material degree.

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Raw Material Carry-forward Effect (RMCF) Breakdown

Smaller YoY & QoQ difference in EBITDA when excluding extraordinary effects

2020 2019 Delta M dls 1Q 2Q YTD 1Q 2Q YTD 1Q 2Q YTD Reported EBITDA 111 74 185 140 161 301 (29) (87) (116) Inventory Adjustment (17) (42) (59) (19) (27) (46) 2 (15) (13) Others 6 6 11 (1) 10 (11) 7 (4) Comparable EBITDA 127 110 238 148 189 337 (20) (79) (99) Raw Material Carry-forward (20) (39) (59) (19) (28) (47) (1) (11) (12) Comparable EBITDA excl. RMCF 147 149 296 167 217 384 (20) (68) (88)

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Relevant References: Crude Oil

Historical lows in April before rebound after OPEC production cuts

Brent Crude Oil Price

53 44 54 71 64 60 20 40 100 80 120

US$/Bbl

Avg. 99 2014 2015 2016 2017 2019 2018 2020

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Relevant References: Paraxylene

Px prices continued to fall in 2Q20 following their correlation with Crude Oil

1,708 1,635 1,641 1,382 992 876 989 924 924 977 1,056 1,100 1,258 1,282 1,165 1,077 955 937 876 590 500 1,000 1,500 2,000 2011 US$/Ton 2012 2013 2014 2015 2016 2Q 1Q 2Q 3Q 4Q 4Q 1Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 2017 2018 2019

NA Px Contract Price

US$143/ton decrease from Mar.’20 to Jun.’20

2020

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Integrated PET Margins

Margins improved by 13% based on resilient demand and lower Asian production

200 74 69 69 62 64 60 72 80 81 104 133 135 117 110 155 140 82 78 83 193 174 186 208 165 159 180 204 184 202 238 346 242 215 214 214 164 145 196 227 100 200 300 400 500 600 2012 2013 227 US$/Ton PET 2015 277 2011 377 1Q 3Q 2014 2016 1Q 275 304 2Q 2Q 4Q 1Q 2Q 3Q 4Q 1Q 3Q 227 4Q 2Q PTA 310 333 393 248 255 223 240 276 263 284 342 478 324 370

China

2017 2018 2019

Asian Margins (Px / MEG to PET)

2020

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NA Propylene Contract Price (PGP) NA Polypropylene Margin (PP to PGP)

12 12 13 15 24 27 19 22 22 22 21 20 15 16 2 4 6 8 10 12 14 16 18 20 22 24 26 28 16 2Q 15 11 cpp 14 12 13 17 18 1Q 3Q 4Q 1Q 2Q 76 60 69 71 39 34 45 54 38 37 38 35 31 26 10 20 30 40 50 60 70 80 17 1Q cpp 12 11 15 13 4Q 14 16 18 2Q 3Q 1Q 2Q 2019 2020 2019 2020

Relevant References: Propylene & Polypropylene

Decrease in PGP contract prices, but Alpek PP margins remain strong

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Continuously improving financial performance

Net Debt decreased by 1% as Leverage remains at strong levels

Net Debt (US$M) LTM EBITDA (US$M) Net Debt/EBITDA (Times)

944 864 850 821 735 2Q20 2Q19 3Q19 1Q20 4Q19 2.2 2.4 1.6 1.7 1.9 1Q20 3Q19 2Q19 4Q19 2Q20 2,084 2,036 1,330 1,436 1,428 2Q19 3Q19 4Q19 1Q20 2Q20

  • 1%
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  • Global Cost Improvement
  • Value-added Products
  • FCF Generation
  • Footprint Optimization
  • Value Chain Integration
  • Product Innovation
  • Maximize CCP Value
  • rPET Leadership
  • Recycling Promotion
  • Sustainable Product Portfolio

Growth Catalysts Details / Description

  • Zero Based Budgeting & process innovation (Mainly Operations, Logistics & SG&A)
  • Shift to products with higher margins & barriers to entry (Copolymers, Grey EPS)
  • Reductions to CAPEX & NWC / Recovery of M&G Mexico debt
  • Ensure global production is performed in optimal sites & logistic networks
  • Grow capacity selectively & integrate into value chain (EPS, Px)
  • New products & business lines (Biovento, Natural Gas Commercialization, CO2, PLA)
  • Optimize project timing & minimize CAPEX
  • Lead rPET supply in Americas through capital-effective investment
  • Secure PET Bale & Flake supply / Equip vPET plants with single-pellet technology
  • Active lobbying for circular economy via associations & The Recycling Partnership
  • Develop sustainable alternatives for all our products (Biodegradable EPS & PP, etc.)

Strengthen Core Business Strategic & Focused Growth Foster Circular Economy

Alpek Growth Strategy

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For Additional Information

Email: IR@alpek.com / Phone: +52 (818) 748-1146

  • 8 Years at Alfa/Alpek
  • Previously held roles in Human Capital, Talent & Culture at Alfa and Axtel
  • BA in International Relations from ITESM

Alejandra Bustamante IR Manager

abustamante@alpek.com

  • 9 Years at Alfa/Alpek
  • Previously held roles as Director of Logistics & Procurement at Indelpro, Director of Energy Markets at

Alfa, and Project Leader at The Boston Consulting Group

  • BS in Industrial Engineering from Cornell University and MBA from Stanford Graduate School of Business

Alejandro Elizondo IRO

aelizondo@alpek.com

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SECOND QUARTER 2020 EARNINGS WEBCAST