I would now like to turn the conference over to Mr. Adolfo Fritz, GRUMA's Investor Relations Officer, who will present earnings results, and then we'll open the Q&A session, where Mr. Raúl Cavazos, GRUMA's Chief Financial Officer, and team will be available to answer any additional questions. I would now like to turn the conference over to Mr. Fritz, Investor Relations Officer. Please go ahead, sir. Good morning. Welcome to our second quarter 2023 conference call. We're pleased to have you all on the line and thankful for the opportunity to share our results with you. With me today, as always, are Mr. Raúl Cavazos Morales, GRUMA's CFO, Rogelio Sánchez Martinez, GRUMA's Corporate Finance VP. To start, we'll take a few minutes to discuss the fundamentals and results for the quarter. Then we'll open it up to any questions you may have. At the close of the second quarter of the year, we're pleased to report that our operation remains as robust as what we have seen over the last few quarters and following the same trends. Have experienced expected price sensitivity to various degrees, particularly corn flour outside of Mexico. Overall, profitability metrics have been safeguarded and, in fact, show a trend towards growth. Moreover, given the nature of this price sensitivity, we expect it to be a temporary factor and it will gradually recede as we move forward. The tortilla business in the U.S. continues to grow steadily, and through innovation and GRUMA's quick response to changing trends, we've been able to not only grow alongside the overall category itself, but also to capture market share along the way. As I hinted a minute ago, overall demand for our products has not changed thus far, and neither has demand for more corn-related products, which continue to be regarded as an nutritious substitute for other, more expensive items in the average consumer basket. The recovery of our operations in Asia, Oceania, and Europe is ongoing from last year's extraordinary cost growth around logistics and weather conditions. We have a positive outlook there, despite some price sensitivity, especially in Europe, as we have protected profitability in light of inflation. It is in our corn flour business where we have experienced most of the price sensitivity I alluded to a minute ago. Both the U.S. and Central America results were affected by a tough basis of comparison from 2Q 2022 and a temporary pullback of demand. Both corn milling volumes in Europe have been gradually recovering since the aftermath of the war in Ukraine. In Mexico, we're pleased to report that volumes are still growing steadily and in line with the previous quarter. In all, total volumes grew by 1%, while sales expanded by 24% and EBITDA by 31% in the second quarter of the year. In the U.S., we have seen great resilience from the consumer and a better-than-expected performance from our clients in the food service channel as they recover from inflationary pressures. Focusing exclusively on the retail channel, we're still seeing very healthy growth across our entire product line, and in particular from our Better For You products, which have helped us increase market share as we meet accelerated demand for these products. As it has been the case in past occasions, corn flour has shown higher price sensitivity as our response to price adjustments. Our new, our industrial clients have increased their inventories to the extent that volumes for the quarter have been impacted by a temporary slowdown in demand, coupled with a tough comparative base in 2Q 2022. Similar to what has been the case in the corn tortilla market, retail corn flour has been in high demand, which is partially mitigating this effect. The operation in the U.S. remains robust and with a positive outlook, although we remain vigilant for the potential impact of continuous inflation on the consumer or any other trade downs along our product lines should economic conditions worsen. Volumes in the U.S. expanded by 1%, while sales grew by 23%, EBITDA came in with a 41% growth relative to 2Q 2022. This translates to an EBITDA margin of 18.6%, while EBITDA per ton, our internal profitability metric, expanded by 40% over the same period. In Mexico, volume growth has remained favorable as the market dynamics we saw last quarter extended into the current period. There's been very manageable price sensitivity from our future tortilla makers, growing demand and recovery from our corporate clients has supported growth in the subsidiary. Mexican market is strong as usual and has presented a solid base for volume growth during these past two quarters of the year. Volumes expanded by 3% and sales by 19%, while EBITDA decreased 25% relative to a year ago, bringing EBITDA margin to 8.1%, which is now closer to our target for the subsidiary. During the quarter, Europe was marked by higher price sensitivity relative to other regions of the world. Consumers were better equipped to bear the burdens of inflation. The tortilla business slowed down temporarily as a result, it is expected to recover as we continue to increase our distribution in the continent. In contrast, corn milling business, which had been impacted by logistics and demand disruptions as a result of the war in Ukraine, volumes sold increased significantly. Volumes in Europe increased by 3%, while sales declined by 2%. EBITDA grew by 16%, resulting in an EBITDA margin of 9.4% and 12% growth when measured by EBITDA per ton. These profitability metrics are now on the high end of the historical range for this subsidiary. Our operation in Central America continued with the trends we saw last quarter, although with a tough base of comparison in 2Q 2022. That, in addition to price sensitivity, resulted in volume contraction, given measures taken to limit the impact of inflation. As I just mentioned... The case I made for Europe is echoed in Central America, where demand slowdown is more temporary in nature rather than a permanent contraction in demand. We expect volumes to recover as we look ahead in the year, our clients' inventories start decreasing relative to present levels. With these fundamentals, volumes in Central America contracted by 6% and sales grew by 14%. This led to profitability to increase by 17% when measured by EBITDA growth, while EBITDA per ton grew by 27%. EBITDA margins reached 12.9%, which, as the case in Europe, is a profitability level above the historical standards for this division. In Asia and Oceania, we saw solid recovery from previous quarters in all markets to subsidiary serves. Performance was strong from Australia to China, as lockdowns and infrastructure constraints are no longer a major obstacle affecting demand, and the entire operation is recovering. Volumes expanded by 8%, while sales rose 10%. EBITDA grew in parallel with a 31% expansion, while EBITDA per ton expanded by 21%. In all, we're very pleased with our operational performance up to this point for the first half of the year. Thus, our expectations for consolidated EBITDA growth have changed. We're no longer expecting a flat or a contraction in EBITDA margin. Instead, we're expecting a slight expansion relative to 2022. This change is being driven by the positive outlook from our operations in the U.S. and the resilience we have seen in the market. On a separate note, we look forward to publishing our second sustainability report at the end of the month, with the aim of keeping market participants and all other interested parties informed with regards to GRUMA's current ESG efforts and milestones. I'd like to open up the call for questions from the listeners today. Could you help us with that please, operator? Thank you, sir. We'll now begin the question- and- answer session. As a reminder, if you have a question, press the star followed by the one on your touchtone phone. If you'd like to withdraw your question, press the star followed by two. If you're using speaker equipment, you will need to lift the handset before making your selection. Our first question is from the line of Fernando Olvera with Bank of America. Please proceed with your questions. Hi, good morning, everyone, and thanks for taking my questions. Adolfo Fritz, regarding your guidance, can you just repeat what is the expansion that you expect on a consolidated basis? Regarding the U.S., I mean, what is the performance on EBITDA margin that you are expecting? I have a second question. Thank you. Yeah, thank you for your question. Overall, on a consolidated basis, we are estimating to have a slight expansion relative to EBITDA last year. It should be around between 20 and 50 basis points higher than last year's last year's EBITDA margin. That is parallel to the performance in the U.S. as well. All the benefits are coming in from the U.S. Okay, great. Thank you. My second question is regarding... I mean, also for the U.S. I mean, given the recent volatility seen in corn prices, no? I mean, they are still down year-to-date, no? Which could favor your hedges for the next year, right? Under this scenario of lower corn costs, how should we think about pricing going forward? We're still evaluating that, given the volatility that we've seen in the corn market, as you very well mentioned. It is still early from our side to be or to draw a conclusion as to prices for next year or where they will be. We will have to continue evaluating and see how corn behaves and what our hedges will be relative to this year to come up with a plan. We normally do that at the end of the year, as you know, during the fourth quarter, we get together and start talking about strategy for the next year. So far, as you very well mentioned, you know, corn prices are volatile and we are evaluating our next steps based on that. Okay. At this point, do you have any color that you can share about your hedges? Sure. I mean, we can tell you that, right now in the U.S., we're hedged for 2024, as we normally do every year, 12 months prior to our needs. Mexico, we're also hedged for 2023, that is. We have to wait until the next harvest in 2024 to hedge ourselves for the first six months of 2024. I believe we are, in that sense, we are covered in hedges for both of our main raw materials. Okay, great. Thank you, Adolfo. Thank you, Fernando. Our next question comes from the line of Antonio Hernández with Barclays. Please proceed with your questions. Hi, good morning. Congrats on the results. Thanks for all the color that you provided on the consolidated results and driving the U.S. operations. Just wondering if you could provide a little bit more guidance or light on the other regions. As you mentioned, some of them are already performing on the higher end of the ranges, for historical profitability, but wanted to get a little bit more sense on what are your expectations given this performance for half of the year, and now what you expect from second half of the year? Thanks. Hi, Antonio. Thank you for your question. Just like I was mentioning to Fernando, the benefit of the accretion on EBITDA margin is due to the good performance of the U.S. Every other region is performing according to the plan we laid out at the beginning of the year. Guidance for regions outside of the U.S. will remain as the guidance we provided at the beginning of the year. The only ones changing by that 20 to 50 basis points of accretions will be margins in the U.S., as a result, on a consolidated basis. Thanks. Just a quick follow-up. In the U.S., in terms of competition, anything that you could provide there, any changes that you're seeing there in competition trends? I could hardly hear. You mentioned competition? Yes, in the U.S. In the U.S. Sure. Right now, what we're seeing is, over the last, I would tell you, five 13-week cycles, which is what Nielsen reports publicly, private label has been increasing its presence, relative to obviously the inflationary pressures that the consumer is feeling in the U.S., or at least the consumer that has been price sensitive. On that end, private label has been taking market share, but at the same time, we have been taking market share also from the overall category growth. Right now, in terms of our competition relative to our performance, we feel very comfortable. The market share that we've been able to take thus far has been supported by our performance in the Better For You market. That is a trend that we continue seeing going forward. Perfect. Thanks for the call, and have a great day. Thank you, Antonio. Thank you. The next question is from the line of Luis Yance with Santander. Please proceed with your questions. Hi, Adolfo. Thanks for taking my question, and congrats on the results. I guess my question is more on the demand elasticity side of the equation. I mean, we've seen very strong volumes across the board, despite the strong pricing. You know, as it was seen on the press release, there's been some price sensitivity in certain areas like corn flour in the U.S. or tortilla in Europe or maybe Central America. Just wanted to know if you could walk us through what could be your reaction function in those cases? Would you stop pushing the pedal on pricing, perhaps become more promotional, or you think this is kind of temporary? Typically, we see you kind of buy your strike temporarily every time you raise prices, but eventually competition follow and they come back. You know, any thoughts around, you know, price sensitivity? I understand that you said you haven't seen major trade downs across the other areas, but any color you can mention on that demand elasticity will be helpful. Thanks. Sure, sure. The reason behind the price elasticity in corn flour is, one, as you very well mentioned, is the temporary defacing of price increases between ourselves and competition. As a result, you have volumes go and come, depending on when the price increases take place from either ourselves or our competition. Second, also because of the, you know, as we adjust prices in corn flour, sometimes our clients tend to purchase everything they can prior to the price adjustment, and as such, the following months, you see a decline in volume or demand, that is. Those are the two variables that we see. Talking from precedents and the history of this company, that is just temporary nature, as we mentioned on the earnings release, and we expect those volumes to recover once the competition has set their prices in the market, one. Two, our clients start depleting their inventories as they use the raw materials. We feel comfortable at this point with the price sensitivity that we're seeing, and that's something very natural in our business. Great. Thanks. My other question is on the cost side, and I appreciate the color you gave us on the hedges for this year and next year. I just wonder, is it fair to say that the most challenging quarters in terms of input costs are kind of behind us, as we lap a full year since we saw the big increases last year due to the Russia and Ukraine contract, and therefore, you know, the margin benefit could actually increase as we head into the second half of the year? I guess that applies both for the U.S., but also for Mexico, as you've mentioned before, you know, we have the two harvests, so clearly, our corn prices have been coming down, but we haven't seen that benefit yet because of that. Just wondering if you could comment on those trends based on obviously the visibility that you have on the cost side. In terms of raw materials, I think that the pressures that we felt in the past have stabilized, obviously. When you look at how the corn market is behaving, it's extremely volatile, and now it is a coin toss to know whether the U.S. is gonna have moisture or drought in the next harvest. That will play a huge role in terms of where we're gonna see the corn prices once we get closer to the harvest. In terms of our cost structure, though, I would tell you that, in spite of feeling comfortable, more comfortable relative to the past, when the war, you know, where the war in Ukraine was more recent and all these corn prices spiked, there's also inflation around other aspects of our cost structure. For example, you know, the logistics that we had to endure, all the logistic challenges and infrastructure challenges that we had to endure over last year, they've been quite meaningful, and inflation is still an ongoing phenomenon. It's not over yet. As I mentioned a minute ago, we're still vigilant on how the economy behaves going forward and how inflation hits our cost structure. Based on that, we'll be evaluating how we proceed with the pressures that we feel on our cost structure for next year. You know, you can say, as you very well mentioned as a conclusion, that in terms of the main raw materials, I would tell you that we're in a more comfortable spot than we were a year ago, but still, inflation is still hitting us in all other costs or inputs around those raw materials. Great. My last question, and it, I mean, the results, as you mentioned, have been quite strong, and as a result, you've raised guidance, in particular for margins. How should we think about that filtering down in terms of capital allocation, in particular to what it pertains to, distribution to shareholders? As you see stronger results, what can we expect there? Any updates you can give us on the CapEx front and perhaps on working capital, as you know, the input costs are stabilizing and easing, but that, whether that could be another source of, you know, cash flow, as it has been, and, you know, a bit of a cash flow issue, or not issue, but you know, it's been consuming cash and working capital in the past. Just wondering, you know, as we think about capital allocation, how does this better outlook reflect on that? Thanks. Yeah, sure. As you could see on our release, CapEx needs have eased relative to last year. We don't think that the guidance we gave will be totally fulfilled in terms of CapEx. I think we're gonna be short of that. With that, we're gonna have capital available. In addition to that, as you mentioned, working capital, we're contemplating a strategy and evaluating a strategy today to lower inventory needs relative to the strategy that we put in place last year to have surplus in inventory. There will be capital available. At this point, that capital, we're thinking of allocating it to the debt levels that we have, which have increased also relative to past levels that we feel more comfortable with. In terms of we're trying to prioritize the use of that capital to lower our debt levels going forward, and until those levels normalize to our standards that we feel comfortable with. Great. Thanks a lot, Adolfo. Congrats again on the results. Thank you. Thank you for your question, Luis. Take care. Our next questions are from the line of Luis Willard with GBM. Please proceed with your question. Hi, good morning, Adolfo and team. Thanks for taking my question. Adolfo, I appreciate your comments on pricing, and I apologize if this question appears to be a bit repetitive, but as you start to prepare for negotiations in the upcoming quarters, late third quarter or fourth quarter, with retailers next month, for next year, my question is: Do you believe, or are you preparing for a tougher bargaining process with them, now that, I mean, you've been hiking up prices consistently, with no volume hampering, and now the cost structure appears to be coming down. You believe that retailers could potentially be a bit more harsh or hard on the pricing front for next year? That would be a first, and then I have a follow-up. Sure. Thank you for your question. You know, I think it's a misconception out there that maybe our negotiations with retailers were easier than usual. Negotiations with retailers are always extremely challenging and very, very tough, no matter what point in time they take place. We try to make our best to pass on the inflation cost and our cost structure and reach a fair agreement with them. They're always challenging. The level of difficulty in negotiations, I would tell you, would be the same as the one that we've been encountered with historically. Right now, however, yeah, given the strategies that we put in place to ward off inflation, we don't see any more negotiations taking place during the second half of the year, and we still have to, as I mentioned at the beginning of the Q&A session, we still have to evaluate how we finish this year and what inflation is like at the end of the year, to then come up with a strategy for next year and be certain that if negotiations take place, be certain that we can or we're able to reach a fair agreement with retailers. Again, negotiation with them are very, very challenging every time we sit down with them. Don't think otherwise, please. Thanks. Right. That's helpful. Thank you. If I may, another one, very fast. On inventories, they appear to have stabilized on a quarterly basis, no? They were practically flat versus first quarter. Can you talk a bit about on the factors behind this effect, and if we perhaps will start seeing them, the inventory levels declining in the coming quarters? Thank you. Yeah. Thank you. Yeah, so our entire strategy in terms of working capital is based on focusing on inventories starting in the second half of the year. We need to see what magnitude that will represent. It is our intent to see inventory levels go down starting in the second half of this year and going forward, until we reach inventory levels that are at the same level or in accordance to our store inventory levels that have helped us in the past. The strategy that we have in place is thought of to be in place starting, as I said, in the second half of the year. We can expect hopefully a decrease in inventory scale going forward. All right. Thank you. Thank you for your question. Our next question is from the line of Sergio Matsumoto with Citigroup. Please proceed with your questions. Hi, good morning. Sergio Matsumoto from Citi. We discussed the price sensitivity a few times. Just wanted to hone in in Mexico, just to flesh that out. How sensitive, how price sensitive is the Mexican consumer? Also in the guidance change, does that, not the, not necessarily the change, but the guidance itself, remind us whether the Mexico royalty accounting change is included or not in the guidance overall? Thanks. Oh, hi, Sergio. Thank you for your question. Yeah, price sensitivity in Mexico, it's different. The consumer is different from the consumer outside of Mexico. Here, product has a social component to it, and we have to remain within the boundaries of competition between our industry and the traditional method. Price sensitivity is measured differently. I would tell you that the consumer here is very stable, and tortilla, as you very well know, is part of every meal in every Mexican household. It is something that we're grateful for, and it's something that helps our business, certainly. We're always in line with the traditional method and very responsible with the product that is considered, has a social component to it, like I mentioned. That is how price sensitivity works in Mexico relative to other regions of the world. In terms of the guidance, yes, the royalty payments are included in the guidance we provided during the conference call in the first half of the year. The guidance doesn't change for Mexico or any other subsidiaries. The only change is in the U.S., which drives the change on a consolidated basis. Okay, great. If I can squeeze in a third, I apologize. Yeah, of course. The tax rate, I know we've discussed this in the past, but I know it has a provision that's related to the Mexico inflation, that drives up the effective tax rate. Can you give us a timeframe of how long that those conditions might last? Is it really, you know, according to the inflation, or is it something else that, you know, would no longer necessitate these provisions? The provisions are a structure of how we, you know, get charged for taxes. We get charged on a cash basis in the U.S. As you know, any difference between the U.S. tax rate and the Mexican tax rate has been charged here in Mexico, which is provisioned for. The caveat there is that the provisioning is the difference between the tax rate in Mexico and the federal tax rate in the U.S., not the federal plus the state tax in the U.S. That's why it's a considerable number. That is something that's part of the structure that we have to live with, and that will be going on as long as the tax rules remain the same. Understood. Thanks for that clarification. Appreciate it. No, thank you. Thank you for your question, Sergio, as always. Our next question is from the line of Alvaro Garcia with BTG Pactual. Please proceed with your question. Hi. two questions on my end. The first one, on your debt level, you mentioned, it is higher obviously year-over-year. Sort of my question is: where would you feel comfortable, sort of longer term, or what's a good target to think of in terms of maybe net debt, EBITDA, of where GRUMA feels comfortable? My second question is on your strategy in terms of buying dollars for your Mexican corn crop. Obviously traditionally, you guys have always hedged and figured out exactly how much those dollars are gonna cost. How are you thinking about that in this stronger peso environment? Thank you. Alvaro, thank you for your question. The answer to the first question is, our target is 1.5x long term. As you very well know, prior to being at 2x, we lingered quite a while at 1.8x, but we're trying to get that even further lower than that to 1.5x on the long term. It's gonna take us a little bit to get there, but that is the plan. In terms of your second question, we are managing that, you know, the FX effects on corn purchases by purchasing. All our corn is being purchased now in Mexico. We're not importing, or we haven't imported corn anymore, at least for the second half of the year. We don't have a mismatch at this point between the imports that we had before and the FX effects of that. On that front, I think we're pretty well covered. Okay. Is it fair to assume that, maybe into 2024, that's the plan as well for Mexico? Yeah, it just depends on how the market is behaving, but so far, that's the plan. Okay. Thank you very much. Thank you for your question, Alvaro. Take care. Our next question is from the line of Ulises Argote with J.P. Morgan. Please proceed with your questions. Hi, thanks for the space for questions. One quick one here on the evolution of the Better For You categories there in the U.S., Adolfo. What has been kind of the developments there that we have seen over the last years? What are you seeing, and if any, change there in the consumer behavior around these products that are obviously more expensive and perceived to be, like, more premium, right? Within the negotiations that you were kind of discussing there on Luis's question before, are you still kind of getting or bargaining for more shelf space for these products, or how are things kind of balancing out in that front? Thank you. Thank you for your question. Better For You has been a great source of growth and profitability for us. They're very successful products. The key there is the market that we're catering to with those products. The market is a market where, similar to our other products in our product line, the tortilla, yes, it's more expensive than other tortillas, but it's still the cheapest item on the consumer basket for that market. In that sense, we haven't seen any trade downs from Better For You over to maybe cheaper products, cheaper wheat products or any other products that matter. Growth there has been stable. Right now, it represents close to 26% of retail sales, and that only represents approximately 8% of volume, and that is the big opportunity for us. It represents such a low portion of volume, that it is our intent to keep on focusing on wheat tortilla, keep focusing on Better For You to expand volume-wise, and as a result, obviously expand profitability by doing so. Our whole strategy is based on that, actually. Our whole strategy is to push wheat tortilla to ride the wave of this momentum that wheat tortilla and Better For You is having. Right now, the American consumer has been purchasing these items very aggressively, and they like the product. It is, you know, you can judge us by our actions. We had to build a whole plant in Indiana to satisfy the demand we were seeing in Northeast. Right now we are in a very good spot for that, and we, as I said, I mean, we have to wait and see how the consumer behaves if there is more or more drastic economic conditions next year. So far, with things that have happened up to this point, we haven't seen any trade downs or any sort of price sensitivity on our growth in Better For You. Okay, no, that is super clear. In terms of shelf space, are you pushing for more? Are you taking out any kind of less profitable products for you there? What's kind of the situation there? It's, you know, we're taking a little bit more of space. We feel very comfortable right now with the distribution that we have and the shelf space that we have currently. It's helped us tremendously for marketing purposes, as well as to expand the brand further. We feel comfortable with that. Right now, it's not on the top of our priorities. Okay. That's super clear. Thanks for the color. Just one, sorry to go back to this on the guidance- Oh, sure. ... there for the U.S. You mentioned the same 20-50 basis points expansion for the U.S., or is it a larger expansion- Yes. ... that drives that at the consolidated levels? No, it's the same, the same range in terms of expansion. That will go through to the consolidated level, as we see the U.S. being the division with the most benefit out of everything that's happening. Okay. Just then to understand that a little bit, how do you reconcile, like, that expectation for the full year versus like the over 200 basis points we saw in the first half of the year? Are you actually expecting a much more challenging scenario there for the U.S. in the second half, or am I missing something here in the equation? No. It's, we're just covering ourselves for any worsening conditions in the U.S. economy, which we haven't seen thus far, said. It's something that we have to wait and see, but it's something that we don't wanna play around with, if economic conditions start worsening. As you very well know, right now, a lot of economies are betting on a soft landing rather than anything else. However, if an adverse scenario should happen, then we will have to wait and see how that affects our profitability. It's something that we don't know, given that inflation levels to this point or at this level, we have not seen for a very long time. All right. Super clear. Thanks so much for that, and congrats on the results. Thank you. Thank you for your question. Thank you. At this time, there are no additional questions. Mr. Fritz, would you like to make additional closing comments? Well, thank you all for being with us, this morning. We look forward to our next call in the next quarter. Take care of you all, and hope to see you soon in market events. Ladies and gentlemen, this concludes Gruma's second quarter 2023 earnings conference call. Thank you for your participation. You may now disconnect.