Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Gruma's third quarter 2024 earnings conference call. During today's call, all parties will be in a listen-only mode. Following the speaker's remarks, the conference will be opened for questions. If you have a question, please press the star followed by the one on your touchtone phone. Please press star zero for operator assistance at any time. For participants using speaker equipment, it may be necessary to pick up your handset before making your selection. 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 will open the Q&A session, where Mr. Raul Cavazos, Gruma's Chief Financial Officer, and team will be available to answer additional questions. I would now like to turn the conference over to Mr. Fritz, IRO. Please go ahead. ... Good morning, and welcome to our third quarter twenty twenty-four conference call. We're pleased to have you 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, and Rogelio Sánchez Martínez, Gruma's Corporate Finance VP. To start, we'll take a few minutes to discuss the fundamentals and results from the quarter, and then we'll open it up to any questions you may have. We're pleased to report the ongoing positive evolution of Gruma and the global markets it serves, continuing with the solid performance it's been showcasing during the year. During the third quarter of the year, the market trends we saw during the second quarter continued its growth in the Better For You category, along with a solid performance achieved by the European and Asia and Oceania tortilla operations, were offset somewhat by the lower sales volume at the food service channel in the U.S. In the corn flour operation, the positive performance from the U.S. retail channel, in addition to stable demand in Mexico, was hampered by ongoing distribution challenges present in the corn milling European division as a result of geopolitical challenges. These fundamentals kept corn flour volumes stable relative to a year ago. In all, consolidated volumes decreased 1% in the third quarter of the year, while sales declined 4% as a result of lower volumes and price adjustments in Mexico at the end of last year, in addition to the aforementioned effects from the food service channel in the U.S. A weaker peso and its effect on the Mexican operation also weighed on this change. That said, despite the challenges and the very tough comparison base from last year, Gruma achieved EBITDA growth of 3%. In the U.S., we're still seeing positive performance in the retail channel, where the majority of our categories have maintained positive growth and acceptance across the market. Consumer selectivity remains particularly evident in the food service channel, leading to higher price sensitivity. As a result, we saw volumes decline in the food service channel, which had an effect on both consolidated volumes and revenues in this subsidiary. We believe this dynamic in the food service channel will gradually reverse. Nonetheless, it will take a few quarters still to see volumes back at the normalized levels, but until then, and as always, our priority is safeguarding profitability. U.S. volumes, therefore, contracted 2%, while revenues also declined by 2%, and EBITDA presented a 3% growth relative to a year ago. In Mexico, strong demand continues from tortilla makers and industrial clients. However, continuous pressures in distribution continue in the face of unusual weather conditions, increasing distribution and logistics costs. Given these conditions, and despite a stable demand base, teams have reported a flat volume and a 1% decline in revenues after the price alignment with the traditional method that took place in the last few months of 2023. Europe's been very successful in increasing distribution points across the continent and outside of the U.K., which is reflected in both the higher composition of the retail business that grew in the high single digits, as well as the significant expansion of profitability, whereby EBITDA expanded by 45%. These results come despite the volume contraction in the corn milling business, which continues to be under pressure from the effects of geopolitical events impacting distribution networks. The performance in this business line weighed down results of the tortilla business, yielding flat volume in the subsidiary when compared to 3Q 2023. The strategy in Central America continues to yield solid results as new and more innovative products become available across the market at the subsidiary reserves. This fostered volume growth of 6% and sales growth of 10%, while EBITDA grew 48%, reaching profitability of 16%, as measured by EBITDA margin. We will continue to innovate more products across the regions in quarters to come, as they've been very favorably accepted. The economic slowdown in China relative to a few years ago has been offsetting the usual performance of our Asia and Oceania operation. This quarter was no exception. A strong demand from Malaysia and Australia were not enough to generate volume growth relative to a year ago. Volume, therefore, remains flat in the quarter, while sales and EBITDA grew by 5% and 24% respectively, and reached an EBITDA margin of 14.1%. Despite its recent performance, we still see China as an opportunity for growth in the future, as a culture for consuming wraps as a complement to meals throughout the day continues to spread widely across the country. In sum, we are coming off a quarter that follows the trends we saw during the first six months of the year, with a stable operation and no surprises in market or operational conditions. We continue with our focus to protect shareholders' interests by focusing on profitability globally and adapting to other variables encountered in the day-to-day operations. We're therefore in line with the guidance we provided and looking forward to a strong finish of the year. With that, I'd like to open up the call for questions from our listeners today. Operator, can you help us out with that, please? Thank you, sir. We will now begin the question and answer session. As a reminder, if you have a question, please press the star followed by the one on your touchtone phone. If you would like to withdraw your question, press the star followed by the two. If you are using speaker equipment, you will need to lift the handset before making your selection. Our first question comes from the line of Lucas Mussi with Morgan Stanley. Please proceed with your question. Hi, everyone. Thanks for taking my question. I have one in the US. I just wanted to hear your latest thoughts on competition. I know that we have talked for some time about how private label has been consistently gaining ground, not only in tortillas, but in the CPG industry in general. But my question here is twofold. First one is, I wanted to hear your latest thoughts and better understand how are you looking at your presence in private label today, if you are satisfied with the current output that you are putting out in terms of private label products, or perhaps do you see further room to grow your private label portfolio? And the second part of my question is related to other branded players. So just wanted to hear your latest thoughts. Are you seeing more investments in terms of capacity, given that, you know, the industry has been performing quite well in the last two years or so? How are you seeing competition in the Better For You part of the portfolio? Have you seen players being more aggressive, launching more products, particularly in the context of, you know, much better, much healthier margins for the industry in general? That's it. Thanks for your time, guys. Thanks, Lucas. We appreciate your questions. So, in the U.S. as a whole, private label did start with a very strong momentum. We envisioned, you know, an accelerated growth, a much more steeper accelerated growth, to tell the truth, at the beginning of the year. As the year has unfolded, we've seen that that momentum has decreased. It doesn't mean that it's not there. It's still a very strong, you know, has a very strong presence in the market, and it's a very strong competitor for market players as a whole. However, the momentum on a sequential basis, as I mentioned, is slowing down. For us, private label today represents approximately 80% of retail sales, and we are obviously coping with the growth in private label. Private label has just been compromising some of our products, the core products, as we like to call them. But we are compensating that with higher production of private label products. As I mentioned, our sales are currently 8%-9% of retail sales. They've increased proportionally as we had to compensate for those products that were core, that were being traded down. But on a sequential basis, I would tell you that things look brighter than they did six months ago. That being said, in terms of competition overall, you know, it's part of business having intense competition. This is no different from any other business. Everybody wants to go into the wellness industry as a whole. If you go to any grocery store across the world, you probably see even Frosted Flakes being branded with protein in them, and any product or packaged product has now a component of wellness in them, so I would point you to that direction that we're facing with or being faced with hard competition all the time. We have the advantage of following trends very closely and being very responsive to these trends through our innovation strategy that we have in place here internally, and therefore, we've been able to capture the growth in the wellness sector a lot better than our competition has. Normally, at least the current branded players have copied some of our products in this space, because we are normally the first movers in wellness and overall in the tortilla space. So I would tell you, we have that advantage of scalability and innovation on our side, but there is definitely more players, not only in our category, but overall in the wellness. The wellness market overall is growing by so much that a lot of players from different industries wanna get a piece of that growth, just logically. So we're, you know, we're focusing on Better For You. Better For You, as you know, has had a good run. It's growing still, with double digit numbers. We haven't seen a deceleration of Better For You at all. Quite the contrary, we're coming out of a few months that have been great for that category in specific, and we see a lot of room for healthy growth going forward still. As you know, volumes are still 12% in terms of Better For You relative to whole retail volumes. So, we still have a lot to do, and we're focused on that at the moment. Thanks, Adolfo. Thank you, Lucas. Our next question comes from the line of Isabella Simonato with Bank of America. Please proceed with your question. Hi, good afternoon, Adolfo, Ro. Thank you for the questions. First one, I just wanted to confirm that the guidance you guys provided in the last quarter. As far as I understood, it remains, right, with pretty much flatter sales and volumes and a margin expansion of a hundred and twenty basis points. So that's just the first point. And my second question would be, you mentioned logistics costs, right? In this quarter, and I understand that that's related to a worse weather conditions. But can you give us a little bit more color on what caused those higher logistics costs, and how should we think about that going forward, if that will be an additional pressure to profitability in the next couple of quarters? Finally, if you could just give an overview on how should we expect pricing dynamics in the U.S. throughout 2025, considering the moves in different channels and eventually a potential recovery on food service, how can we think about that? Thank you. Sure. In terms of your first question, yes, you know, we reiterate the fact that the guidance is still as we adjusted it in our last conference call with those 120 basis points over in terms of margin. I would tell you that in terms of distribution, there are different factors taking place depending on the division that we're talking about. In the U.S., for example, freight there have increased, you know, they're really weighing a lot on our SG&A because we've been... Demand has been so much that we have been able to transport from coast to coast, sometimes, product to help alleviate some of the demand that's not being currently supplied from our plant in Indiana. So, we still have to incur those costs. Thankfully, demand has been very, very healthy, but that comes at a cost of these additional costs, and freights will just keep increasing, proportionally, not only because of the demand we're seeing, but also, as a whole in the industry, freights have gone up in terms of pricing, since, I don't wanna call it labor crisis, but since labor was pressured by inflation to the degree it was in past quarters. So that is the U.S. In Mexico, it's a different story. In Mexico, we've had unusual weather. It's been a very unusual summer, a more wetter summer. And by default, some of the roads that we normally use are closed or are not accessible to us, so we have to take different routes, and by taking different routes, well, that has a different cost that we have to incur currently, and that is the situation there. And in terms of Europe, we, as probably everyone on the call knows, we started operation in the U.K. So, we expanded the operation over to Spain to be able to provide tortilla over to the rest of the continent. And by doing so, we are exporting product from Spain into other parts of Europe that have higher costs in terms of distribution and transportation, particularly with the geopolitical events happening in Ukraine. But I would tell you that those are the different factors. Now, when are these gonna be resolved? Well, unfortunately, the events in Ukraine, probably it's really an unknown where they're gonna be resolved or how they're gonna ease logistics costs in Europe. In terms of Mexico, it's something very temporary in nature. I would say that probably the next quarter, there will be, we'll have a different outcome when it comes to these logistics costs. And in terms of the U.S., that's a little bit harder to see just because, you know, as long as demand keeps increasing and we have to take all these routes to subsidize, if you will, the production or the additional production needed in Indiana, those are the costs that we're gonna have to be incurring. But all in all, I think that all these additional costs are temporary in nature, and they should alleviate as we go further into twenty twenty-five. Now, in terms of your other question, I would say that you can expect in terms of the channels, you can expect food service to be recovering, hopefully even before the year end, but definitely by the first quarter of next year, we should see some positive we should have some positive news in terms of volumes there and then the recovery of client accounts. In terms of our focus in the retail space, Europe will keep on with their very positive expansion and the job that they've done extremely well to expand retail distribution even further from where it was. That's why we've been having an, you know, an incremental profit coming from Europe because of this effort. And in Asia and Oceania, we'll be adding probably some capacity, production capacity, in China as all these food service chains keep on growing despite the, you know, the, I wouldn't, I would say, the incomparable growth in terms of the Chinese economy with how it was prior to these last two years. I would tell you, those are the things that you could be expecting next year, and we're excited for those opportunities and we're preparing our budget and our mindset already into twenty twenty-five to hopefully be able to deliver good results. Thank you so much. Thank you. As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Isabella Simonato with Bank of America Please proceed with your question. Hello. Hello, Adolfo. Thank you for taking my question. So it's, I'd like to explore the two of the regions here, right? First of all, is the Central America region, right? We read here that a more sophisticated portfolio of products, right, that ended up impacting the segment. So just wondering what's what's behind this, if we could talk a little bit more about the portfolios. It seems with this that there could be some interesting opportunities for the region. And second, for the Asia and Oceania here, we also saw some interesting results, strong results. So just if we could discuss a bit more the different geographies that have going on here. If I'm not mistaken, in the initial remarks, you said you commented about Malaysia going well. So just any additional information here would be appreciated. Thank you. Hi, Thiago. Thank you for your question. Yeah, Central America is has had a terrific run. What is happening there is that the division has successfully penetrated or expanded the distribution networks into other regions that it serves with different products that, prior to this, were not readily available in those regions that were just penetrated. So with that, we started selling all the more sophisticated products that were probably concentrated more in the northern part of Central America, and we started expanding those products into the other markets that we served there, and they were really welcomed very positively. So our job right now is to keep developing and keep distributing all these, sophisticated products that were part of the normal array of products that we have in some regions and try to level those in other regions as well. In addition to keep thinking about how to add sophistication to the corn flour that we sell in Central America. So yeah, it's interesting for us. We feel that we've come to a new normal in terms of profitability capabilities in Central America because of this, and we're excited about the opportunity that this brings for us. In terms of Asia and Oceania, we are extremely excited just because, you know, we have to deal with the unfortunate situation of not having China as strong as it's been, usually. But Malaysia and Australia have more than made up for this. Keep in mind that the majority of the sales have been food service centric, so there is a huge opportunity still to keep expanding in retail when and if that happens. But if that doesn't happen, just by having China coming back, quote unquote, "online," in terms of their economic growth as it was a few years ago, you know, that will hopefully add to the results that we're having today, and that we're presenting today. Because of that opportunity and because of the way food service chains keep expanding in China and are going to keep expanding at the same rate, that's why we're firm believers in investing and focusing on the Chinese potential at this point, obviously backed by the solid operation in Malaysia and Australia. Fantastic. Thank you very much. No, thank you for your question. Our next question comes from the line of Lucas Ferreira with JP Morgan. Please proceed with your question. Hi, guys. Two questions from my side. The first one, if you can develop a little bit more on the innovation strategy in the U.S. So in terms of how many more SKUs you're bringing to the market, let's say in the next twelve months, and your go-to-market strategy, are you getting into more channels with this? How has been like a brand investment being developed? So in other words, how should we see some potentially some acceleration of better for you in the midterm, or not? Do you think it's this, like a, let's say double-digit growth is something that we should expect to see for the years to come? And the second question, if you can remind us of how your hedging is being developing for next year. If you can give us a sort of a qualitative view on that, if you think it's two thousand twenty-five will still be a year of some cost wins for you. Any call will be appreciated. Thank you very much. Thanks, Lucas. Appreciate the question. Well, yeah, I mean, innovation is at the forefront of our strategy, so you can expect us always to be thinking about ways to innovate products. However, as we pointed out in the past, we have to wait until a specific trend is detected and analyzed, and then based on that trend, a product is developed to satisfy the demand that that trend is generating. That's why we are reactive in nature, not so proactive in nature. The number of innovations is determined by that specifically. So far, we have around four new products in the pipeline that we are working on, and we're trying to find the right time, when and how to bring them to the market, depending on how the current trend lines keep if they keep growing or they slow down. But so far, things are looking in the right direction, and we're just waiting for the time and place to launch them at the appropriate time. In terms of 2025, I think that we're gonna keep on being focused on the operation. I think that one of the focus that we want to change or we want to adjust is obviously volume, specifically in the food service channel, which, as I said, you know, it's prone to see a solid recovery maybe as early as next quarter, and obviously into 2025. So we're excited for that. You know, in every other aspect of the operation, I think the focus will be quite similar to this year. So I would expect the same variables to play into 2025, with our focus on innovation and our focus on expanding Better For You even further, trying to expand even more than those 12% composition that we have currently in terms of retail volume. We'll see. We're very excited for what 2025 can bring for the operation, and we are, as I said, ready to go into our budgetary meetings for the year and start planning ahead. Perfect. Thank you `very much. Thank you. Thank you. Our next question comes from the line of Bernardo Malpica with Santander. Please proceed with your question. Hey, Adolfo, thank you for taking my question. My question is, in Mexico, we saw a very relevant expansion in operating and EBITDA margin due to efficiencies in the cost of sales, if I'm correct. Just could you remind us a bit what those efficiencies consist of, and what we should see going forward? Thank you. Sure. You know, the expansion in EBITDA in Mexico is mainly composed of efficiencies that we found in some of the distribution costs, in addition to mainly actually the other income component. As you know, we have some insurance claims that were paid off this quarter, and that you know increased EBITDA in addition to EBITDA margin proportionally. Perfect. Thank you. Thank you. Our next question comes from the line of Jorge Izquierdo with BTG Pactual. Please proceed with your question. Hi, Adolfo. Thank you for the space for questions, and congrats on the results. A quick one from my side: Could you please share an update on the sales penetration of Better For You products in the U.S., please? Thank you very much. Thank you for your question. Sure. Right now, Better For You is the whole portfolio is still growing as a whole, so the Better For You part of the portfolio is still around 30% of our retail sales. We're hoping to increase that proportionally as we see more demand with these new launches, and it's growing at double digits, so we're very pleased with the performance and the penetration it's got so far. Very clear. Thank you very much. Thank you. Thank you. We have no further questions at this time. I would now like to turn the floor back over to Mr. Fritz for closing comments. Thank you again, guys, for tuning in to another quarter, and we're looking forward to seeing you in market events in the future. Thanks again, and have a great day. Ladies and gentlemen, this concludes Gruma's Third Quarter 2024 Earnings Conference Call. 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