ALFA reports 1Q22 EBITDA of US $644 million, record high first quarter

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Apr 25, 2022, 17:09 ET

MONTERREY, Mexico, April 25, 2022 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) ("ALFA"), a company that has developed a diversified portfolio of leading businesses with global operations, announced today its unaudited results for the first quarter of 2022 ("1Q22"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

1Q22 HIGHLIGHTS

ALFA	2022 EBITDA Guidance revised up 17% to US $2.283 billion Record first quarter Revenues of US $4.191 billion and EBITDA of US $644 million US $196 million dividend approved at Annual Shareholders' Meeting and paid in 1Q22
Alpek	2022 EBITDA Guidance revised up 32% to US $1.365 billion Record quarterly EBITDA driven by strong reference margins across core products Signed agreement to acquire Octal for US $620 million; transaction expected to close in 2Q22
Sigma	2022 Guidance maintained, supported by solid performance outside Europe Europe EBITDA impacted by abrupt increases in energy prices and other input costs Formed new Advisory Board comprised of 13 members; 62% independent
Axtel	1Q22 results negatively impacted by semiconductor shortage; Gover. segment sales; and lower revenues from large wholesale customer 2022 EBITDA Guidance maintained; subject to potential revision depending on future market developments Initiatives to accelerate strategic agenda include active discussions with interested parties to evaluate potential partnerships

Message from ALFA's President

"We hope you and your families are remaining safe and healthy. 2022 has started off strongly; with double-digit growth in first quarter Revenue and EBITDA that exceeded our expectations.

Consolidated EBITDA of US $644 million was a record high first quarter for ALFA. The good performance was driven by Alpek which continues to capitalize on high reference margins across its core products of polyester, polypropylene and expandable polystyrene.

Sigma and Axtel faced unexpected headwinds which resulted in lower EBITDA at both companies. Sigma's European operations were negatively impacted by abrupt increases in energy prices and other input costs, as well as lower pork exports to China. In Mexico, Axtel's results were affected by project delays caused by the global semiconductor shortage, lower Government segment sales and lower revenues from a large wholesale customer.

Taking into consideration Alpek's outstanding performance year-to-date and optimistic outlook, ALFA's 2022 EBITDA Guidance increased to US $2.283 billion from US $1.949 billion. We fully acknowledge the volatile global macroeconomic and geopolitical environment impacting energy prices, raw material costs and exchange rates, among others. However, certain favorable trends that boosted ALFA's first quarter results are expected to continue and outweigh the foreseeable headwinds.

At the subsidiary level, Alpek increased its 2022 EBITDA Guidance 32% to US $1.365 billion driven primarily by higher reference margins for its core products. Sigma's Guidance remains unchanged supported by better-than-expected performance in regions outside of Europe. Axtel also maintained its 2022 Guidance but is subject to potential revision depending on future market developments.

We remain fully committed to taking actions that address ALFA's conglomerate discount through consistent progress of our Unlocking Value plan, focused on three key implementation directives:

1. Reducing leverage is an important precondition to achieve the independence of ALFA's subsidiaries. Strong performance over the past two years has driven significant improvement in financial ratios. This trend continued in 1Q22 with consolidated Net Debt to EBITDA of 2.3 times, a 64-basis point improvement year-over-year. Reflecting its strong financial performance, Alpek's Net Debt to EBITDA reached 1.0 times at the close of the first quarter.

Deleverage may also be complemented through strategic alternatives. Even though this front has not resulted in a transaction, we continue seeking options in our Shareholders' best interest.

2. Strengthen the businesses via growth and profit-enhancing initiatives is important to continue boosting their underlying value while ALFA's transformation process is completed. Alpek announced the acquisition of Octal, a major global producer of PET sheet. As described recently, this is a transformational investment that forward integrates Alpek into an adjacent, high-value business and accelerates the Company's progress towards its ESG goals, among other benefits. Importantly, Alpek has the financial strength to fund the acquisition and continue distributing cash to shareholders. Sigma launched the third edition of Tastech by Sigma® to extend its collaboration with the entrepreneurial ecosystem, and continued rolling out Better Balance®, its global plant-based brand. Axtel's mobility project "Alestra Móvil" added more enterprise mobile customers during the first quarter, offering an attractive service alternative supported by its intelligent, multi-operator connectivity feature to end- users. Axtel is also actively engaged in discussions with interested parties to evaluate potential partnerships in certain parts of its business to capitalize on attractive market opportunities.

3. Enhanced business independence will allow a seamless transition from ALFA's legacy conglomerate structure towards an independent business management model. Sigma announced the formation of an Advisory Board, comprised of an extraordinary group of individuals with diverse areas of expertise, including retail, healthcare & nutrition and entrepreneurship. We are excited by the prospects of the Advisory Board's new perspectives as Sigma strives to remain at the leading edge of evolving consumer preferences.

At the ALFA level, Paulino Rodríguez, Senior Vice President of Human Capital and Services, has retired after a successful 18-year career. We greatly appreciate Paulino's enthusiasm and dedication as a driving force in ALFA's development of Human Capital, leaving a long- lasting legacy in the Company's culture and values. Following Paulino's retirement during the first quarter, the Human Capital function was combined with the Finance function.

Our approach to capital allocation maintains a balance between deleveraging, investing for growth, and returning value to our shareholders through dividends and a share repurchase program. We held our Annual Shareholders' meeting in March, where shareholders approved a dividend payment equivalent to US $196 million and a maximum amount of Ps. 5,800 million (approximately US $290 million) for share repurchases.

Shareholders also received an update on ESG-related initiatives at the Annual meeting. ALFA, Alpek and Axtel published their respective, integrated 2021 sustainability reports. Sigma recently published an Executive Summary in anticipation of its extended GRI version. Key highlights include Sigma reaching three of its 2025 Sustainability Goals ahead of plan. We invite you to learn more about our progress through the recently published reports, available on each company's website.

Consolidated first quarter results put us on a path for another strong year in 2022. Yet, we remain vigilant amid a fluid global macro environment."

Keep well/Stay safe,

Álvaro Fernández

SELECTED FINANCIAL INFORMATION (US $ MILLION)
	1Q22	4Q21	1Q21	Ch. % vs.	Ch. % vs.
	1Q22	4Q21	1Q21	4Q21	1Q21
ALFA Revenues	4,191	4,086	3,388	3	24
Alpek	2,332	2,152	1,614	8	45
Sigma	1,711	1,768	1,613	-3	6
Axtel	124	136	140	-8	-11
ALFA EBITDA¹	644	505	535	27	20
Alpek	456	269	324	70	41
Sigma	161	201	181	-20	-11
Axtel	35	40	45	-12	-22
ALFA Comparable EBITDA²	520	534	414	-3	26
Alpek	333	300	203	11	64
Sigma	161	199	181	-19	-11
Axtel	35	40	45	-12	-22
Majority Net Income	210	-166	154	227	37
CAPEX & Acquisitions	92	159	79	-42	17
ALFA Net Debt	4,906	4,677	4,864	5	1
Alpek	1,310	1,225	1,219	7	7
Sigma	1,795	1,691	1,781	6	1
Axtel	585	574	627	2	-7
ALFA Net Debt/LTM^*EBITDA	2.3	2.3	2.9
ALFA LTM^*Interest Coverage	6.4	5.4	4.3


*	Times LTM = Last 12 months.
1	EBITDA = Operating Income + depreciation and amortization + impairment of assets.
2	Excludes extraordinary items.

1Q22 EARNINGS CALL INFORMATION

Date:	Tuesday, April 26, 2022

Time:	1:00 p.m. EDT (NY) / 12:00 p.m. CDT (CDMX)

By Phone:	United States:	+1-877-451-6152
	International:	+1-201-389-0879
	Mexico:	800-522-0034

Conference ID:	13728372

Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1539469&tp_key=9a11854d7d

Replay:	https://www.alfa.com.mx/RI/conference.htm

About ALFA
ALFA manages a diversified portfolio of leading businesses with global operations: Sigma, a leading multinational food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Alpek, one of the world's leading producers of polyester (PTA, PET, rPET and fibers), and the leader in the Mexican market for polypropylene and expandable polystyrene (EPS). Axtel, a provider of Information Technology and Communication (ITC) services for the enterprise and government segments in Mexico. In 2021, ALFA reported revenues of Ps. 308,060 million (US $15.2 billion), and EBITDA of Ps. 41,050 million (US $2.0 billion). ALFA's shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange. For more information, please visit www.alfa.com.mx

Disclaimer
This release may contain forward-looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. These uncertainties include, but are not limited to, risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, availability of workers and contractors due to illness and stay at home orders, supply chain disruptions and other impacts to the business, or on the Company's ability to execute business continuity plans, as a result thereof. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information. Figures are presented in Mexican Pesos or US dollars, as indicated. Where applicable, Peso amounts were translated into US dollars using the average exchange rate of the months during which the operations were recorded. Financial ratios are calculated in US dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.

SOURCE ALFA, S.A.B. de C.V.