Hello, and welcome to today's Q2 2023 results conference call and webcast. My name is Leslie, and I will be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's conference call and webcast are being recorded. During the presentation, we will have a question and answer session. To follow the conference online, please visit https://consorcioara.transmision.com.mx. The word transmission is with one S only. If you would like to view the presentation in a full screen view, please click the full screen button in the upper left-hand corner of your screen. Press the same button to return to your original view. It is now my pleasure to turn today's program over to Alicia Enriquez, Co-Chief Executive Administrative and Finance Officer. Please go ahead. Thank you, Leslie. Good morning, and a warm welcome to our conference call on the Q2 2023 results of Consorcio ARA. This call will be also transmitted via webcast, accompanied by a slide show for visual support. With me on the call to discuss the results are Germán Ahumada Russek, Chief Executive Officer and Chairman of the Board, Luis Felipe Ahumada Russek, Vice Chairman of the Board, and Miguel Lozano, Co-Chief Executive Operating Officer. I want to alert everyone that certain statements and comments made during the course of this call must be considered forward-looking statements as defined by the Securities Litigation Reform Act of 1995. Consorcio ARA believes that such statements are based on reasonable assumptions, but there are no assurances that current outcomes will not be substantially different from those discussed today. All forward-looking statements are based on the information available to the company on the date of this call. The company is under no obligation to publicly update or revise any forward-looking statements as a result of new information that may become available in the future. As usual, at the end of our prepared remarks, there will be time for Q&A. We'll wait until then to open the queue for questions. I will now turn over the call to Germán Ahumada Russek, Consorcio ARA's Chief Executive Officer, for this morning remarks, please. Good morning, and thank you all for joining us this morning. Results for the Q2 of 2023, compared to the Q2 of 2022. The results for the Q2 of 2023 included a double-digit growth at the bottom line, which was reflected in stronger profitability and a positive generation of free cash flow to the firm. Housing revenues totaled MXN 1.77 billion in the Q2 of 2023, a 4.9% growth over the same period of last year. These revenues came from the sales of 1,511 homes, with an average price of MXN 1,173,000, a 10.8% increase. Breaking down our Q2 2023 revenues by segment, affordable entry level homes brought in MXN 537.4 million, a slight reduction of 1.3% from the year earlier period. Middle-income home sales reached MXN 684.7 million, a 9.5% increase, residential home sales reached MXN 550.3 million, a 5.8% growth. Revenues from other real estate projects, mainly from the sale of land and shopping center leases, totaled MXN 63.7 million, 18.2% lower than in the Q2 of 2022, due to lower sales of commercial land. Total revenues, meaning the sum of housing revenues plus revenues from other real estate projects, came to MXN 1.84 billion in the Q2 of 2023, a growth of 3.9% compared to the same period of the preceding year. Looking at the revenue mix in the Q2 of 2023, affordable entry-level homes contributed 29.2%, middle-income homes, 37.3%, residential, 30%, and other real estate projects, 3.5%. Between April and June of this year, operating income totaled MXN 212.7 million and rose 29.5% over the same quarter of last year. Net income was MXN 180.8 million pesos-... A 13.4% increase. EBITDA was MXN 277 million, a growth of 12.2%. Note that the growth in operating income, net income, and EBITDA all exceeded the growth of revenues. This was attributable primarily to a reduction in costs and expenses. As in the previous quarter, we also did not have the one-off expenses that affected us throughout 2022. In the Q2 of 2023, the operating margin was 11.66%, improving by 230 basis points over the Q2 of last year. The net margin was 9.8%, an 80 basis points, point gain, and the EBITDA margin was 15.1%, rising by 110 basis points. In addition to our improved profitability, in the Q2 of this year, we generated positive free cash flow to the firm of MXN 268.4 million, which compares very well against the MXN 81.6 million reported in the same period of last year. Results for the first half of 2023 compared to the first half of 2022. In the first six months of 2023, total revenues, meaning the sum of housing revenues and revenues from other real estate projects, came to MXN 3.41 billion, 2.3% higher than in the same period of last year. Housing revenues totaled MXN 3.37 billion, 2.5% higher than in the first half of 2022, and corresponding to the sales of 2,835 homes, with an average price of MXN 1,188,000, a 13.1% increase compared to the first half of the previous year. Breaking down our sales by housing segment, in January-June 2023, affordable entry-level homes totaled MXN 987.8 million, a 9.1% reduction from the year earlier period, due chiefly to the conclusion of two developments. Middle-income homes sales totaled MXN 1.29 billion, 10.7% higher, and residential home sales reached MXN 1.1 billion, a year-over-year increase of 5.6%. Revenues from other real estate projects, mainly from the sale of land and shopping center leases, totaled MXN 124.1 million, 3% less than in the first half of 2022, due to lower sales of commercial land. Looking at the sales mix for the first half of the year, affordable entry-level homes contributed 28.3%, middle-income homes, 36.8%, and residential, 31.3%, while other real estate projects accounted for the remaining 3.6%. In the first six months of the year, operating income totaled MXN 384.4 million, a 21.2% growth over the same period of last year. EBITDA totaled MXN 506.8 million, an 8.9% increase, and net income was MXN 340.8 million, a 14.3% growth compared to the first half of 2022. Between January and June 2023, we generated positive free cash flow to the firm, totaling MXN 224.9 million. Financial position as of June 30, 2023. As of June 30, 2023, cash and cash equivalents totaled MXN 3.11 billion, a slight 1% decline compared to the balance at the close of the previous year. Accounts receivable ended the Q2 of the year at MXN 658.3 million, quite stable compared to the balance as of December 31, 2022. Accounts receivable turnover was 1.1 months. Total inventories as of June 30, 2023, amounted to MXN 15.88 billion, a 2% increase over the close of the previous year. As of June 30, 2023, cost bearing debt came to MXN 2.30 billion, basically unchanged against the balance at the close of 2022. Short-term maturities, meaning debt coming due in the next 15 months, made up 9.9% of cost bearing debt, and long-term debt, 90.1%. As of June 30, 2023, 64.7% of our cost-bearing debt was in the form of the ARA 21X and ARA 21-2X notes. 18.1% were simple secured loans for our shopping centers, 10.8% were simple unsecured bank loans without real estate collateral, and the remaining 6.4% were lease liabilities. Net debt remained negative because the balance of cash and cash equivalents exceeded our cost bearing debt, resulted in a net debt position of negative MXN 811.9 million. Our leverage ratios remain at optimum levels. Cost bearing debt to EBITDA was 2.33 times. The net debt to EBITDA ratio was negative 0.82 times, while the interest coverage ratio was 3.60 times. If we base this ratio on coverage of net interest, meaning in interest expense less interest income, it would be negative by 371.1 times because interest income exceeded interest expense. On May 19th of this year, S&P Global Ratings confirmed Consorcio ARA's long-term issue, issuer rating of mxAA- with a stable outlook in its report, which can be viewed on our corporate web page. The agencies cited ARA's key strengths as one of Mexico's largest housing developers, the business model flexibility that comes from its diversification of housing segments, and its substantial land bank, as well as its low debt levels and high cash flow generation. Housing industry performance. According to Mexico's National Institute of Statistics and Geography, INEGI, as of May 2023, in annual terms, industrial activity in general grew by 2.8% compared to the previous year. Construction industry growth was 8.1%. As in 2022, it was driven mainly by civil engineering works. The building sub-sector, which includes housing, rose 2.7%. According to data from the Unified Housing Registry, RUV, in the first five months of the year, 68,627 homes were registered, a 12.9% increase over the same period of last year. 49,756 homes were produced, 9% lower. Regarding mortgage lending between January and April 2023, which is the latest information available, based on data from the National Housing Commission, CONAVI, INFONAVIT granted 43,713 loans for the purchase of new homes, a slight decrease of 1.2% compared to the same period of last year. These loans represented an investment of MXN 27.1 billion, 14.3% higher. The average size of a new home loan between January and April 2023 was MXN 621,000, a 15.7% increase compared to the same period of the previous year. FOVISSSTE, for its part, granted 4,551 loans for new homes in the first four months of the year, 39.9% less than in the same period of 2022. The investment in this totaled MXN 3.43 billion, 37.6% lower. The average size of a new home loan granted between January and April 2023 was MXN 754,000, a 3.9% advance over the same period of the year before. As for commercial bank home financing, in the first months of 2023, 32,217 mortgages were granted for the acquisition of new and used homes, a 10.8% reduction compared to the same period of last year, and the investment in this totaled MXN 69.4 billion, 3.2% higher. The average size of a loan granted between January and April 2023 was MXN 2.15 million, a 15.6% growth compared to the same period of the previous year. In the first half of 2023, 44.2% of our revenues came from homes financed by INFONAVIT, 13.3% from FOVISSSTE, and the remaining 42.5% from commercial banks and homes purchased without financing. Shopping centers. In the Q2 of 2023, revenues totaled MXN 106.9 million, a 4.9% growth over the same period of last year, while net operating income was MXN 71.9 million, 4 point% higher. Revenues in the first half of 2023 totaled MXN 206.5 million, a 6.5% increase over the same period of last year, while net operating income was MXN 140.9 million, a growth of 7.4%. These results correspond to shopping centers that are 100% owned by ARA and are consolidated into our financial statements. Centro San Miguel, Plaza Centella, Centro San Buenaventura, and Plaza Carey, the uni and mini centers, as well as 50% of Centro Las Américas and Plaza Ventura. According to our stake in those properties, which are entered under the equity method. Total gross leasable area in our 6 shopping centers and in uni and mini shopping centers is 205,275 square meters. The occupancy rate as of June 30, 2023, was 94%, a very competitive level. Dividends. On August 9, our company will pay a dividend of MXN 200 million, which was approved in the general ordinary annual shareholders meeting held on April 20 of this year. This amounts to a dividend of MXN 0.1626 per share, a yield of 5.08% based on the closing price of 2022, which was MXN 3.20. This dividend will be drawn from the net fiscal earnings account as of December 31, 2013, which means it is not subject to tax withholdings. An extraordinary meeting was held on the same date, when shareholders approved the cancellation of 23.9 million shares that have been held in the repurchased funds, representing 1.9% of our total capital stock. Renewal of market maker contract. On June 27, we announced the extension of a contract for the provision of market maker services, which we signed in June 2019 with BTG Pactual. This contract will help continue supporting the market liquidity of ARA's shares. The contract extension began on June 29, 2023. It will remain in effect for 12 months following that day, date. Sustainability. ARA is an active participant in the global effort to protect our planet because it is the right thing to do, also because it is the best way to do business. We are convinced that today, more than ever, good operational and financial performance must go hand in hand with positive results in environmental, social, and governance matters. Over the past year, Consorcio ARA developed a materiality matrix to establish the most relevant topics for the company and its stakeholders. The topics we identified as material, both in terms of their impact and financial materiality, were:... employee health and safety. Second, innovation and technology, third, operational eco-efficiency. That matrix, along with other information on our economic, environmental, and social performance, can be viewed in our 2022 Annual and Sustainability Report, which is available on our corporate web page. In that report, we also detail on the use of the proceeds of our ARA 21X and ARA 21-2X sustainable bonds. With regard to environmental aspects, I'd like to make special mention of the Nationally Appropriate Mitigation Action, NAMA Project, which our company joined in 2015, and whose aim is to design, evaluate, and develop housing prototypes equipped with eco-friendly technology to reduce their thermal consumption and in turn, their CO2 emissions. Homes built with these technologies are doubly beneficial, since besides their environmental advantage, they also offer homeowners significant savings on their water and their electricity bills. Since participating in this program, ARA has built 40,500 NAMA homes with eco-technology, which have prevented emission of more than 14,400 metric tons of CO2 into the atmosphere by reducing the use of gas, air conditioning, and heating. Assuming that each of these homes has an estimated useful life of 40 years, the result is a reduction of 576,000 metric tons of CO2 emission in this period. In 2023, we have continued to work on our sustainable strategy, which involves initiatives and metrics that allow us to reaffirm our commitment to sustainable development. Conclusions. Generally speaking, housing demand remains constant with a steady supply of mortgage loans, inflation has slowed, and the benchmark interest rate has been unchanged since March. In the second half of the year, we will continue to invest strategically in current projects and in the openings we announced at the start of the year. We project higher revenues in the remaining six months than in the first half of the year. We have a great team of employees, considerable experience, financial solidity, and very high quality land banks, and a diversified product portfolio, which includes the significant value of our shopping centers. With all of this, we intend to continue sizing opportunities as they arise in Mexico's housing industry. Thank you. We will now move to the questions and answers. We will now start the Q&A session. We would like to take any questions you might have for us today. If you would like to ask a question over the audio line, please enter star eight on your telephone keypad. In case your question has been answered, you may cancel it by pressing star eight again. If you have been listening to the webcast and would like to ask a question, you may type your question using the chat area located on the right-hand side of your screen and click Submit. We will begin by answering questions from the audio lines, followed by those we receive from the webcast. The first question from the audio lines is from Mr. Javier Gayol from GBM. Please go ahead. Hi, Germán. Hi, Alicia. Congratulations on the results. Thank you. I have two questions. The first one is related to land bank acquisitions. If I'm not mistaken, I didn't see any this quarter, and usually throughout the year, I think they're being very- Very minimum. Quite small acquisitions, if any. Do you have anything on your side for this year that we should be aware of? That would be my first question. If so, what sort of size, what kind of projects are you thinking of? That would be my first question. I don't know. We could do them separate, I think that would be best. Hi, Javier. Well, just for this time, Mr. Ahumada cannot participate in the Q&A session, but, well, I will be very glad to answer. Regarding, and thank you for your questions. Regarding land bank, yes, you are right. We haven't bought any land in the first semester. We are close to buy a piece of land in Tijuana that it's a very, very good market. It hasn't been easy because, as you know, prices are very, very high, and also geographically, it's a land difficult. We are close. We expect to close that deal in this second half of the year. Also, we would like to buy a land in the north area, let's say Nuevo León. We haven't found an attractive piece of land there. We are still looking for. That's the, yeah, the main states where we would like to have more land in this second semester. Our projections is to buy at least MXN 200 million or MXN 300 million in land. That's super helpful, Alicia. Thank you. My second question is regarding the your debt and how are you guys thinking about it? Because the interest payment, of course, we've given the rates have increased, and you currently hold a net cash position. Are you guys in any way looking at maybe doing something in terms of refinancing or paying down debt, or does that make any financial sense at this stage, or are you comfortable with how your financial structure and your debt structure is? Yes, Javier. Well, we feel comfortable with the ratio of debt to EBITDA of around two times. As you saw in the presentation, MXN 1 million, MXN 1 billion, sorry, MXN 1 billion, we have to pay it at the end of the following year. We would like to refinance that amount. It's a kind of a cash and debt that we feel comfortable. As you know, the following year is an electoral year, so we want to be ready in case of volatility. Yeah. Very helpful. Just one last question, if I may. Sure. On the shopping centers, Alicia. The numbers that you're presenting, are they? Would we think that this is fully the deployment of the expansion of Las Américas? Or should we expect some new, you know, leases to come in or something like that? Just to understand if we are including Las Américas as a whole. Are our numbers fully reflecting Las Américas' expansion as of today? Yes, Javier. Well, the expansion is fully completed. In fact, the shopping mall is doing very, very well with a lot of affluency. Yes, it is completed, the expansion. In the following years, we are going to work in the remodelation of the first part of the shopping mall. The, let's say the MXN 100 million or so that you reported as revenue, that should be. There's no inorganic revenue coming from tenants, starting to lease or paying in Las Américas the expansion, right? This is just, let's say, the normalized amount of revenue that we should be looking at on a quarterly basis? Exactly. Well, the occupancy rate is 92%. We expect to grow. Okay. It's a very good, level, but. Mm-hmm. In the following months, we expect to have a greater occupancy rate. That makes sense. Yeah. Yes. Yeah. Sorry, Alicia. No, that makes sense. No, just wanted to clarify that. Thank you so much for. Thank you, Javier. Have a great day. Thank you again. The same. Thank you. Thank you very much for your question. Our next question is from Mr. Juan Macedo from GBM. Please go ahead. Hi. Thanks for the call. Congrats on the results. Hi My first question is regarding working capital dynamics. We saw some great inflows from other liabilities. We were wondering if you could give us some color on that? Sure, Juan. Thank you. Well, as I mentioned, we expect to invest from MXN 200 million to MXN 300 million in land that we really need in order to maintain our participation in the north area of Mexico. That, as you know, is doing very well in terms of the demand. In work in progress, well, also, as Mr. Ahumada mentioned at the end of the call, we are working on the 10 openings new projects. Although we have these 10 new projects, we expect to still have a positive free cash flow at the end of the year. great. Could you give us some detail on what happened in other liabilities? Sure. Some cash inflows for the company? Yes. Well, it's just the dividend provisions that we are going to pay on August. Since April, we recognized this obligation or this provision in our financial statements. It's MXN 200 million, Juan. Great, great. Thanks for the color on that. I would also like to ask you about dynamics in the low-income segment. We saw some positive results this quarter. Could you give us some color on those dynamics? Are you expecting this to be the normalized levels of revenues or improving results? What do you think? Yes. What we expect for the full year is that this segment represents a little less than 30%. At the beginning of the year, as you probably remember, we had some challenges regarding heavy rains in Tijuana, where we have an affordable entry-level project that it's very successful, and also some lack of labor in Quintana Roo, where also we have two projects that attend this segment. Is doing well, this segment, but at the end of the year, we expect that it will represent around 30%. That's great news. Just one more follow-up question on pricing. On a year-over-year basis, we saw improving results, we saw some lower pricing dynamics when comparing to last quarter. This obey, maybe you're selling more of different projects or what does this obey? That's correct. That's correct, Juan. It depends on the mix of the projects that we have. For example, Paraiso Country Club, that is one project that we have in Morelos. Well, it has a higher price than other residential projects that is doing very well in Guerrero. It depends on the kind of projects, because as we have seen, we have been capable to transfer the cost increases into the prices. It depends absolutely from the mix of projects that we have, and obviously it depends on the location, amenities, et cetera. Great. That's great detail. Thanks a lot. Once again, congrats on the results. Thank you, Juan. Thank you very much for your question. As a reminder, if you have a question over the audio line, please enter star 8 on your telephone keypad. We have finished the conference call questions and will now continue with the webcast questions. If you have been listening to the webcast and would like to ask a question, you may type your question in the chat located on the right-hand side of your screen and click Submit. Thank you, Leslie. We don't have, now, questions in the webcast, so, we can end the call, please. This concludes the question and answer session for today.