Good morning, welcome to Grupo Rotoplas conference call. Please note that today's call is being recorded, all participants are currently in listen-only mode to prevent background noise. The host will open the floor for questions later. Today's discussion contains forward-looking statements. These statements are based on the environment as we currently see it, as such, there may be certain risk and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the investor section of its website. The presentation for the call and the web test link are in the investor section. Today's call will be hosted by Mr. Carlos Rojas Aboumrad, Chief Executive Officer, and Mr. Mario Romero, Chief Financial Officer. I will now turn the call over to Mr. Carlos Rojas. Good morning, everybody. I appreciate your presence here today. Our Q1 results highlight our strengths as well as some of the challenges that we are addressing and the opportunities that exist moving forward. Sales of products continued to grow, as did the sales of services driven by both Bebbia and our water treatment plants businesses, which made a significant recovery during the quarter. We registered growth in local currencies across most of our markets, in spite of economic uncertainty and social and political disruptions in many of them. We were able to leverage the leadership position of our brands to execute pricing strategies that enabled us both to ensure our competitiveness and protect our margins, in combination with a strict expense discipline. This growth, which is increasingly diversified both geographically and in terms of business lines, showcase the continued strength of our core business and the potential of our Water-as-a-Service platform. This is the second consecutive quarter in which our services business continues to expand. The pipeline for the water treatment plants in Mexico and Brazil has a great outlook, and bookings are regaining traction. Meanwhile, Bebbia, our drinking water service, continues to grow, and Rieggo, our agricultural water solutions business, continues to develop. However, the growth in sales in local currency during the quarter was offset by the strength of the Mexican peso and the relative weakness of other currencies in the region. As Mario will discuss in greater detail later, if we excluded the effects of the exchange rates, our growth would have been significantly larger. The super peso, as it has been called, also had an impact on our net income. It affected the valuation of our FX hedging instrument, which is a key component of our risk mitigation strategy, resulting in an increase in our financial expenditures. We also experienced some operational issues as we upgraded our e-commerce platform in the United States, which together with record levels of rain and snow, impacted our growth in that country. We have addressed the operational issues, and we still assess a great potential for storage and septic tank solutions in the country. As impactful as the strength of the Mexican peso was for our overall growth, however, it did not prevent us from continuing to pursue and achieve greater profitability. Just like we have discussed in previous calls, our focus on margin improvement is relentless, and it shows in their sequential expansion. In fact, this quarter we reached a historical gross margin and a record high EBITDA margin, which were further boosted by the benefit of lower raw material prices. Likewise, our capital allocation and expense discipline enabled us to continue investing in the development of our new businesses and the modernization of our core, while still keeping operating expenses in line with sales growth. This drove the growth of our operating income and, more importantly, our return on invested capital continues to surpass our cost of capital. In short, in spite of the temporary bumps we encountered and that we are addressing decisively, we continue to build the Rotoplas of the future. The agility and discipline that we have achieved, combined in the leadership position of our brands and the new growth venues we are pursuing, will ensure that we are in the best position to make the most of developing trends, such as nearshoring and increased water stress, while navigating an uncertain economic, social, political environment in some of our markets and effects of exchange rates. We expect nearshoring, for example, to have an impact in demand for water and water solutions across Mexico, well beyond the demand specific to the relocated enterprises. It is worth noting that the significant portion of relocation of production chains is bound to take place in states that already have high levels of water stress, that S&P has recently assessed that the number of Mexican states with high water stress is expected to double if no mitigation measures are undertaken in the next 30 years. Currently, 11 states are exposed to high water stress, with great impact from droughts on their economic activity and even daily life on many of its inhabitants. This will increase the need for investment in water infrastructure by local and federal authorities, but also by companies and individuals. In this context, our commitment to empowering our clients and societies to make the best use of water, providing them with smarter and decentralized solutions to help them address their water needs, is more relevant than ever. We remain steadfast in our commitment to people and planet as we continue to lead and innovate in this crucial industry. I am pleased to announce that our company has been recognized as one of the top eight ESG performers in our industry in the S&P Global Sustainability Yearbook. Furthermore, we're proud to be the only Latin America company included in this category. We were recently recognized as one of the companies that are committed to the inclusion of people with disabilities in the workforce in Mexico, by Éntrale. In short, while we face some challenges, we are confident in our ability to continue building the Rotoplas of the future. Thank you for being with us today. I will now hand over to Mario. I'm eager to hear your questions or insights you may have. Thank you, Charlie. Good morning to everyone. I am pleased to report that our company has achieved positive results in the Q1 of this year. Our efforts to increase profitability while contributing to the well-being of our communities and employees have paid off, as reflected in our financial performance. Despite some specific and short-term challenges, we remain committed to achieve our 2025 goals. The products division revenues grew only slightly by 1.4% year-over-year. The slow growth in Mexico was primarily attributed to the performance of the water storage category, which was greatly impacted by the drought in the northern region last year. In 2022, this condition led to increased sales, which were not replicated this year despite the continued critical water availability. Despite this, the division's EBITDA shows significant expansion of 52.8% year-over-year. This indicates that the division was able to control its costs and improve its profitability, even though its revenue growth was not very strong. The services division's revenue grew impressively by 54.1% year-over-year. This growth was driven by the strong performance of Bebbia and the water treatment and recycling segment. Despite this robust revenue growth, the division still reported negative EBITDA. This means that the division's learning costs were higher than its revenues, leading to an operating loss. When looking at the company's consolidated revenues, the results were mixed. Mexico outperformed all regions with a strong increase of 10% year-over-year. This growth was driven by the services division, indicating a well-rounded performance. Argentina reported a small decline in revenues of 0.8% year-over-year due to an FX effect, meaning that the weakening of the local currency negatively impacted the company's revenue growth. The United States reported a significant decline in revenues of 15.9%. This was due to two factors. One, an operational disruption in its digital platform, and two, lower demand for storage tanks. Both of these factors negatively impacted the company's revenue growth in that country. Our quarterly operating profit grew 97% year-over-year, reaching MXN 438 million, even after accounting for MXN 86 million in expenses associated with the development of new businesses. Operating expenses grew in line with sales, showing operating leverage in our core businesses. Our EBITDA grew 72%, amounting to MXN 553 million. The EBITDA margin grew 800 basis points, reaching 20%. In a nutshell, the company's product division was able to improve its profitability despite slow revenue growth. The services division saw strong revenue growth but still struggled with profitability. The company's consolidated revenues were mixed, with some regions performing well and others facing challenges. As for the balance sheet, we maintain a strong balance sheet despite the FX effects, which provides a solid financial platform for both pursuing growth and profitability. Our net debt to EBITDA ratio is 1.6x, below our 2x leverage policy. Our cash position is still increased quarter-over-quarter. Despite a 12-day increase in our cash conversion cycle, it was due to lower sales in some countries where we operate. We remain disciplined and agile with our capital allocation and spending, ensuring that we prioritize the key growth drivers. Our ROIC reached 16% as of the end of March, exceeding our guidance and 400 basis points above our cost of capital. It is the thirteenth quarter that we report positive spread between ROIC and cost of capital. We are committed to upholding and implementing the best ESG principles and practices, which is reflected in our initiatives and efforts. The last one, we partnered with the United Nations Development Programme to launch a Fluir, a program focused on providing access to water and sanitation in Mexican municipalities that most lack it. We also implemented initiatives to promote gender inclusion and empower women. At our shareholder meeting today, we will discuss and approve a dividend payment of MXN 0.50 per share and nominate for the first time Dr. Leo Rastogi to the board of directors, whose extensive experience in digital analytics, e-commerce, strategy, and workplace well-being will nicely complement our board skills. Finally, as you all know, we have revised our sales growth guidance to greater than or equal to 10%, given the strong peso that we are forecasting for the remainder of the year, while maintaining an EBITDA margin between 16% and 17% for now. This margin can be reviewed upwards in the next quarter if conditions prevail. Net debt to EBITDA ratio will be maintained in equal to or below 2 x, and the return on investment capital 150 basis spread of our cost of capital. Thanks for your attention, and we look forward to answering any questions you may have. Thank you, Mario. Let's start with the Q&A. You can submit a question by pressing the Q&A button in the screen. The first question is from Sofía Martin, GBM. Hello, Charlie and Mario. Thank you for your time, and congratulations on the results. I want to understand a little better the decrease in revenue growth guidance. Was this mainly driven by the negative foreign exchange effect that you saw this quarter, or is there another reason? It is. I'm not mute, yeah. It is mainly that, Sofía, so thank you very much for joining, and thank you for the congratulations. Yes, the super peso has affected on revenue in quantity and so affects that growth. Mario, anything else that you'd like to share? I'll just probably complement that as we disclosed, I think it was the last meeting, we said that we set up our plan for 2023 at MXN 21.5 pesos to the dollar. Now we believe it's gonna be trading on average for the year at MXN 19. That's a 30% effect, which on the revenue side, as Charlie explained, affects the growth in Mexican pesos. In the cost side, it benefits because we are experiencing a lower cost. That's kind of the effect, and that's one of the reasons when I spoke about the guidance, is that we're gonna be reviewing also our EBITDA margin target during the quarter, and can be reviewed upwards if conditions prevail. The second question is from Carlos Alcaraz, Appalachian Research. Hello. Thank you very much for the call and for taking my question. It's also related to revenue. My question related to growth, do you expect this year to be driven by price or volume? Thank you very much for your question, Carlos, and for joining. Revenues, we have seen that have been affected greatly by drought in a positive way in the previous years. We do see that there is an increasing challenge in terms of drought, particularly in Mexico. In the U.S., it did change significantly with the amount of precipitation, rain and snow, it will impact demand in the U.S. even though there's a big opportunity because of lower market shares in the U.S. In Mexico, we do see a good opportunity for growth still because of high water stress. Argentina continues to have important volatility, there is good opportunity for water solutions, there are other factors influencing Argentina. The other markets, Brazil, Central America, Peru, they continue to have these business tailwinds regarding scarcity. I would say that it is going to be highly related to that need for water solutions. On the other hand, in Mexico being the largest market, like you mentioned, revenues are being affected by FX rates. Mario, anything else you'd like to share? Yeah. Just to add on a bit more of color on your question, Carlos, we are reviewing our pricing strategy going forward into the year. As we are set up right now, the growth is coming more from volume than pricing. We might probably speed up growth in the volume side because of all the different benefits we've been experiencing through FX and raw material costs. That's something we are reviewing. The teams of the business units are reviewing that info. I think next quarter we can give you more color on how that efficient pricing versus volume end up for the remainder of the year. Okay. The coming question is from Martín Lara, Miranda Global Research. Good morning. Thank you for the call. The gross margin was very strong. Can we expect it to normalize at this level or will it come down? Mario, would you like? I think that connects just to the other question. Martín, good morning. Thanks for joining us today. That's exactly what we are just reviewing. I don't know, you might recall from the previous call that I remember someone made the question around what— how the supply chains and all the raw materials things happening and the debottling. I remember we mentioned that, you know, we were as it happens the same way back in April, May 2021, we were experiencing a lot of debottlenecking of the supply chains and raw materials. A lot of raw materials are coming back pre-pandemic levels. Now we're facing that. It's like the demand is there, raw materials are better, prices stay high. Now it's time to reveal that and come out with a strategy that maintain us in great market shape with leading brands and a good profitability. The reason I said that connects to the previous question is because this quarter we're reviewing what's the best pricing strategy going forward to set up the gross margin as well. I think about normalizing gross margins, I think we'll be in a better position to discuss that in the next call. As I mentioned again, we also will be reviewing and we're editing the margin target for the year as well. We have another question from Carlos Alcaraz. Regarding the digital platform in the U.S., do you have another update scheduled during the year? Yes. Thank you, Carlos. It is a platform that will continuously be evolving. As a digital platform, the capabilities improve all the time, and so our solutions should also evolve all the time. We do not have an important development and release for this year. It is just finishing this big launch of a tool that we have been developing for quite some time now. We did face some challenges in that process of going live with that solution, but we expect results to improve in an important way going forward as this solution matures. It is also a solution in which we have learned tremendously, and we will be leveraging those learnings for the rest of the company. We do expect growth in the U.S. in a more stable way going forward in terms of revenues. Sofía Martin, she has another question. Could you please give us more color regarding the development of Rieggo? Thank you. You want to take that one, Mario? Sure. Well, as all new businesses, takes a longer and happens in different ways, the way you develop all businesses. We, I think all of us would love to happen the same way as when we draft our draft the first business plan. I think the direction is the right one. Rieggo is starting to gain a very attractive traction. Pipeline is filling up. I think the value proposition that we are offering to the market has started to get the likes of our clients in that segment. Going forward, we believe we'll be posting positive results on Rieggo performance. I don't know, Charlie, you wanna comment anything else around? No, just maybe that- It's harder to develop businesses that the business, the original business plan says, and you're an expert in innovation. What's your take on what I'm saying? Yeah, I agree with you. You know, it took us a while to understand how to best leverage Rotoplas 's capabilities and strengths in this very new business because it was seemingly a very different market. Yes, agriculture is very different from the rest of the business that we do, but there's tremendous strengths that we have that we are finding finally how to leverage. We do expect better traction going forward. It's been a stage of tremendous learning and, we will start to see that learning materialize in the future. We're very excited about it. Sorry. The next question. Don't worry. Considering the strength of the Mexican Peso, will you be looking to modify your strategy with respect to currency risk? No. I think, you know, our currency risk strategy has played well for a long term. As you may recall, back 2020, when the pandemia hit, we got a very positive effect on FX, and we capitalized on that. 2022 and 2021, it was a good currency risk. 2023 it's the opposite as from 2020. Again, it's like we do currency risk management just to cover the raw materials that are exposed to the U.S. dollar. That's connected to our financial plan for a year. In some ways, the risk is a business plan risk for the year, and we don't do any speculative risk. Having said that, we feel that, being conservative on the way we manage that risk without taking speculative risk, it plays better off for all the stakeholders, in the long term. Obviously, you have these ups and downs, like the one I explained back in 2020 and now the one that we're experiencing in 2023. Thank you very much for that, Mario. Just to complement a little bit more and clarify is, our strategy is to provide stability to our business, leveraging our strength in our balance sheet and in our brand. We do not play a strategy to maximize profitability, but for generating more stability, which allows us to focus more on the development of the business. I think it's one that's very conservative and that has served us well. Like Mario said, it will play differently in different cycles. It is one that we have enjoyed very much in the process of developing the business. We have two additional questions from Martín Lara. They're about Mexico's and Argentina's operation. What do you expect with respect to Mexico's profitability levels? The other one is, how do you see the performance of the Argentinian operation during the rest of the year? Mario, do you wanna take the first one just to... Sure. Well, the Mexico thing, Thanks, Martín, again for bringing additional questions. The Mexico margin, again, we are reviewing the pricing strategy given the situation we have explained before. We will give you more color going forward. As for Argentina, we just had this past Monday our regional board meeting, where we discussed in profound around Argentina. You know, the local model says that 2023 is gonna be very similar to 2022 in terms of volumes. Obviously, there's the big question around midterm elections happening in August. There's like a view that from today to August is gonna be very similar to last year. From September to December, it's gonna be very dependent on what happened on those, they call it PASO elections. As of today, we are maintaining the business plan and as we have it. The team in Argentina, they just updated their forecast, and it's pretty much in line on what we planned by the end of last year. That is what we have in Argentina. Obviously, Argentina, it's a special topic that deserves a lot of attention. The local management team and the corporate management team, we are all focused on delivering the best value out of that operation. Just one additional comment is that the outlook for increase in exports in Argentina looks very promising, which would, create tremendous, opportunity for Argentina. We hope to see that materialize, but this will be in the context of important volatility considering the elections as Mario had mentioned. Felipe Barragán with BTG Pactual. A quick follow-up question. It's about Rieggo. Have you all considered inorganic growth for this business? Considered inorganic? Correct. Inorganic growth for the business. Mario. Yes. I think, Felip a, and I think about two calls ago, we explained that we were shifting the our inorganic approach as a company, developing a programmatic M&A strategy to accelerate the services growth profile. Riegg o is one of those. We are, we have in place a programmatic M&A program within Rieggo. We can accelerate the growth profile to capture the opportunity that we are seeing in the Mexican market. We have one last question from Sofía Martin, GBM. Regarding the new legislation in Brazil, that migrates from a state-owned to a private water model, would that have an implication in our strategy for this country? Our strategy. Thank you for the additional question, Sofía, our strategy in Brazil considers that change in legislation, which is gonna really promote the development of the water treatment plant business in that market. It is one strategy of multiple possible strategies that will happen throughout the whole region. There will be regulation changes that will promote more decentralized solutions one way or another. It is one that will affect us in a relevant way, in a positive way. We're very excited to see that happen. Mario has been studying the topic in more depth. I don't know if you have an additional opinion, Mario? No. I think we can give to you, Sofía, the all the- You know, we have one page where there's a summary of what marketplace is that change in regulation creating in Brazil, which translate into the market opportunity that Charlie was explaining. I guess, Mariana, if you can help us sending that to Sofía so she can have a clear understanding on what's really the market opportunity in Brazil. Sure. We have a question from Mauricio Buitrago, and it's, why we didn't update the margin guidance. I was explaining, yes, we are working hard with the teams to review the pricing strategy going forward. Once we have that, we can commit with the market on an updated margin guidance. Thank you. It's also about margins. Felipe Barragan, BTG, is asking, how has supply evolved, and how sustainable do you think the gross margin is? There's a couple effects on that. One is. Remember that our long-term margin target is in the neighborhood of 20%. That's the long-term EBITDA margin we are targeting as a company. To achieve that, it mainly needs to happen that services start to gain traction. That early calls that Charlie was talking about, start to become profitable as businesses as they grow and are more able to absorb their fixed costs. Having said that, we believe that in the long term, we will have a sustainable EBITDA margin in the neighborhood of 20% as services pick up. On the product side, we have a very good margin profile and we are reviewing. Again, sorry for coming back to this issue, but it's an important issue. We are reviewing with the new set up of raw materials and FX, where it makes sense to balance our volume market share mix. Once we achieve that, then we say, well, this is the gross margin that can be sustainable for the long run. That's something we are reviewing, as mentioned. I would love to give you more color on that. Again, I think the trajectory is to hit that 20% EBITDA margin in the long term. We're just reviewing what's the best way to achieve it. We have another question from Felipe Barragan. I think we already talked about the effects, but he's asking, are you expecting an MX, the peso Mexican depreciation or perhaps adding other derivatives on the lower end? Well, look, I think those are two questions in one. We will not be adding any more derivatives. As mentioned, we have a derivative program, which is as Charlie mentioned, to bring stability to our business plan for the year. We don't take any speculative derivatives. That's the answer for that question. For the other one, I have the view that the Mexican peso will keep strong. You can see the different inflows that we are experiencing as a country from the remesas, from the nearshoring, and from the tourism and from others, which is really creating a big flow of dollars into the Mexican economy. With all those factors plugged in, I think the Mexican peso will keep strong for the rest of the year if nothing extraordinary happens in the economy or political space, no. The last question. Michelle Gálvez, Principal Financial. Could you give us some color on the strategy the company stated in order to take advantage of nearshoring? How is this moving the needle in your strategy? Hi, Michelle. Thank you very much for joining us and for your question. It is something that we look forward to. I think that as new industrial facilities are built, there will be a requirement of our traditional products. Obviously, the use of water for those industries will increase the water stress, which will require more solutions such as rainwater harvesting, water treatment, and water reuse. Not only will those industrial facilities be built and generating an increase in water consumption and an increase in water stress, which increases the amount of water solutions that these buildings will need, but also, we will see lots of housing around these industries, which is also a good opportunity for Water Plus's products and services. It will create a big opportunity for us. It is an opportunity though, that we would have the industrial capabilities to service. We could react very agile, in a very agile way with other capabilities needed to implement, such as engineering design to services for implementation. We would have the balanced financials to support this growth. We will take a strategy where we will be being very proactive in selling these solutions. That's gonna be the first approach to it. In terms of building capabilities, those will be built in a very agile way once these industries are being built and require those solutions. We're actually very good at identifying. We have tremendous strengths at identifying any new buildings, in the Mexican market. Thank you. That was the last question. Would you like to say something else, Mario or Charlie? I'd just like to thank everyone for joining and for your time and interest, and wish you a very good next quarter, and see you next time. Likewise. Thank you very much for joining us this morning. Have a great day. I know you are full of reports and earnings call. Take it easy. Well, thank you all for joining us. If you would like to learn more about our initiatives and efforts in the ESG arena, during the past year, we would like you to invite you to read the annual report, which is now available in our website. Thank you all. Have a nice day. Thank you. Bye-bye.