Good day, everyone, and welcome to today's Kimberly-Clark de México's 2Q 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to CEO, Pablo González. Please go ahead. Thank you. Hello, everyone. We hope you're having a terrific summer, and thanks for participating on the call. As usual, I'll make some preliminary remarks and then pass it on to Xavier to provide some details on the second quarter results. We had another record quarter net sales, EBITDA, and net income, and we continue to post strong margins. We sequentially improved our EBITDA margin for the tenth consecutive quarter. Let me first provide some perspective on the top line. Our consumer products business remains very strong. Our brands metrics continue to improve, and our shares are healthy. We're flat or gaining share in most categories. Sales, sequentially higher and also a record, grew low single digits versus a strong comparison. Sales grew 2% on top of 12% last year. Volumes were slightly down because of a sequential slowdown in our categories, coupled with our actions on our part to adequately develop the categories going forward. On the one hand, we intentionally reduced volumes for summer promotional activities, given that the same had been expanding in length and depth for some years. We don't believe it's conducive to healthy and consistent category growth. On the other, we implemented price increases during the quarter in our tissue businesses, averaging 5%, to absorb pulp price increases, which, as is always the case, had a temporary negative effect on volumes. Given the steps we have taken, we're confident our sales will pick up, supported by relevant innovations and our effective commercial execution. Professional posted strong volume growth, and export finished products achieved another quarter of strong double-digit growth. However, tissue parent rolls once again decreased and impacted our top line by more than MXN 100 million and roughly 100 basis points. It's important to point out that we expect a positive contribution for this line of business during the second half of the year. I will share some thoughts on our cost perspectives going forward, once Xavier covers the details on the quarter's results. Good morning, everyone. During the second quarter, our sales were MXN 14.1 billion, a record and a 2.6% increase versus the previous year. Total volume was up 1.6%, and price and mix contributed 1%. Consumer products grew 1.7%, away from home, 3%, and exports, 10.5%. Year-over-year, consumer products volume was down 1%, while price and mix was up 2.7%. As Pablo mentioned, export sales were impacted by approximately MXN 100 million of lower hard roll sales, while exports of finished products grew 67.7%. Cost of goods sold decreased 4%. Against last year, recycled fibers, some resins and fluff were favorable, while virgin fibers compared negatively. The FX was lower, averaging 6% less. Our cost reduction program once again had very good results and yielded approximately MXN 400 million of savings in the quarter. We continue investing behind cost savings and production efficiencies and finding more cost-efficient materials and sourcing. Gross profit increased 13.7%, and margin was 42.3% for the quarter. As G&A expenses were 9% higher year-over-year, and as a percentage of sales were up 108 basis points. Distribution expenses are up year-over-year, although the investments to improve our footprint and streamline our logistics operations have started to yield positive results, and we are improving sequentially. Operating profit increased 16.8%, and the operating margin was 25.1%. We generated a record MXN 4 billion of EBITDA, a 14.8% increase. EBITDA margin was 28.7%, a 50 basis points sequential improvement, and a 310 basis points differential versus the second quarter of 2023. Cost of financing was MXN 356 million in the second quarter, compared to MXN 381 million in the same period last year. Net interest expense was lower, since we have less net debt. During the quarter, we had a MXN 37 million FX loss, which compares to a MXN 1 million gain last year. Net income for the quarter was MXN 2.1 billion, with earnings per share of MXN 0.69 and 18.5% increase. We maintain a very strong and healthy balance sheet. During the quarter, we paid MXN 3.3 billion of debt, and our total cash position as of June 30 was MXN 16.9 billion. Our net debt to EBITDA ratio was 0.7 times, with an EBITDA to net interest coverage of 11 times. All of our debt is denominated in Mexican pesos, thus avoiding foreign exchange variations. Thank you. Back to Pablo. Thanks, Xavier. Some of you have expressed concern over the rising costs of pulp and the potential impact of a higher exchange rate on KCM's results. Let me first address pulp. Over total fiber usage, recycled fiber represents close to two-thirds. Prices follow their own dynamics, and contrary to virgin pulp, they have been stable. Virgin pulp makes up the rest and accounts for about 10% of our cost of goods sold. Virgin pulp prices have been increasing over the last 7-8 months behind demand from the U.S. and China, but industry experts believe prices will start to revert in the coming months now that China is on the sidelines, inventories are increasing, and there's significant new capacity coming onto the market. In addition to the market dynamics, we are investing to increase our paper-making manufacturing flexibility to utilize the most cost-effective mix. Also, as prices have gone up and impacted our tissue business costs, as already mentioned, we have increased prices to offset them. These price increases, together with the pulp price decreases that should start materializing in the coming months, and the added flexibility to switch between grades, should help these businesses maintain solid margins in the near future, despite comparing to their lowest base in the second half of last year. When it comes to the exchange rate, at the current rate and even two pesos higher, we would still be able to post margins within our long-term target range, and that is assuming that we don't take any actions, price or cost related, to absorb some of the impact. So given current expectations, we believe that we will continue to post strong margins for the year at the high end of our target and throughout next year. As this materializes, we will be in a strong position to increase investments behind our brands, innovations, and execution capabilities, as well as continue to increase our dividend. Finally, before taking your questions, let me remind you that we recently published our 2023 sustainability report, where we detailed not only our results, but also our progress towards our 2030 goals. We are proud to be global leaders in our industry in various metrics, among them, the lowest use of water per ton produced and reaching 100% use of pulp from sustainable sources, and of our important progress to meet our aggressive targets. Which is why we have been recognized as leaders in the field by various sustainability-related indexes, including the Mexican Bolsa Sustainability Index, the FTSE4Good Index, the Dow Jones Sustainability Index, MILA Pacific Alliance, and we're the only Mexican company to be part of the Dow Jones Emerging Markets Sustainability Index. With those preliminary remarks, now we'll turn it over to your questions. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We will pause for a moment to allow questions to queue. And we'll take our first question from Bob Ford with Bank of America. Hey, good morning, everybody. Hi, Pablo, Xavier, Salvador, Lizeth, and congratulations on the quarter. Thanks for the comments. I thought they were very reassuring. Pablo, could you provide a little bit of detail on innovation, particularly some of your open price point efforts and your ability to prod industry price discipline? And, you know, how are you thinking about, you know, competition and industry behavior in the second half of the quarter? And then with respect to exports, you know, they were impressive, particularly given the weakness in the, or the decline in the hard roll business. How should we think about export mix and sales going forward? Thank you. Thanks, Bob. Thanks for your multiple questions. Let me start with innovation. As I've mentioned before, we are very, very excited with the innovation pipeline. We've already brought into the market a very important innovation this year, particularly on Huggies diapers. But also we changed our whole product offering on Kotex fem pads with a much, much improved product. And as I take a look at the pipeline, we will have innovation on diapers, both Huggies and KleenBebé, in the third quarter, fourth quarter, first quarter of next year, and beyond. But those are already in place, and we're ready to go. And we'll continue to improve on our adult incontinence products, as well as on the tissue business, which, by the way, this year we will be celebrating the 100 years of Kleenex. And we've got not only some very attractive products to match the birthday, but also very important activities with our clients. So very, very excited about our pipeline, and no doubt pushing the pipeline further on our premium and super premium segments, so that we can continue to add value to the categories. In terms of price discipline, I mean, we, as I mentioned, given that we were seeing pulp prices come up, we went ahead and increased prices during the quarter on our tissue business. Some other participants followed suit, some didn't. I suspect that what happened is that they were caught in the heavy summer promotional season, and they were not able to do it before it all started, as we did. But we would suspect, given again the increases that, as the promotional season starts to slow down, that we might see them move forth. That's in the Tissue category. In the rest of the categories, I think things have been pretty pretty stable. Competition is always strong in our categories, but that has always been the case, and we're very glad that, notwithstanding us pushing prices forth, and taking the decision, as I mentioned, to not put out there as much volume as in past years on the promotional season, that our shares have held up very, very well. In terms of exports, it's really the finished product, of course, a part of the business that has performed really, really well, and we're excited with what we see in the future there. As I've mentioned before, we have been talking to a partner in terms of how to think about the North American supply chain, so not only the U.S. or Mexico separately, but North America as a whole. And as we do that, we are finding interesting opportunities going forward. Some of them will take a little bit of time to materialize, but over time, we're confident that we will have a more effective, more efficient supply chain together. And I think that that means that we'll have some great opportunities on that business going forward. And on the parent roll business, which has been a headwind for quite a few quarters now, we see the light at the end of the tunnel starting this quarter. So we are confident that it'll be a positive for this quarter, so a tailwind, no longer a headwind, and that'll be the case going forward. So things are looking good, Bob. No, very helpful, Pablo. Thanks again, and, and congratulations on the quarter. Thank you. We'll take our next question from Ryan Levine with Barclays. Please go ahead. Hey, this is Ryan filling in for Ben at Barclays. So looking at the price increases you implemented and the negative volume reaction, do you expect volumes to return to more normalized levels sequentially as customers adjust to new prices? Or do you think it's more of a new volume level as customers are a bit more price sensitive? Thanks. No, I think volume should return to normal levels, Ryan. Again, whenever we increase prices, we see this happening, but then markets tend to adjust. And we've been very effective in the past couple of years at introducing prices as was needed because of the cost pressures. And volumes have been steady and behaved as we expected, and again, we expect those to come back to normal levels going forward. Awesome. Thanks for the color. Congrats on the results. Thank you. We'll take our next question from Kevin Zavala with UBS. Good morning, Pablo, Xavier. Congrats on the results. We know that the accumulated cost savings in the first half was more or less 10% below the savings achieved in the first half of 2023. Please, could you give us more color on this deceleration? Thank you. Look, when we, if you take a look at the first half of the year, we're pretty much in line with where we were last year. And we believe we will achieve about the same amount for the year as we did, in 2023. And we're already working in 2025 with some, great, opportunities. So, you know, in our case, this is not just a, a cost reduction program, it's a culture, it's, it's part of our, our DNA, that we're always looking for opportunities to be more efficient and bring down our costs. So it's been quite a few years that we've been able to reach a, a very important, of our costs in terms of cost savings, and we expect that to continue going forward. Super clear. Thank you. Thank you. We'll take our next question from Antonio Hernández with Actinver. Hi, good morning. Thanks for giving a quick congratulations on the results. Just wanted to clarify, what did you mention regarding cost savings expected for the year? That's my first question. The second quick one on consumer and away-from-home, what are the expectations for the second half of the year? Thanks. Antonio, we were able to hear the first one clearly, and just to state it again, we expect our cost savings to be pretty much in line with what we achieved last year. We didn't quite get. get. The second question didn't come out very clear. We can barely hear you. So can you repeat it, please? Okay. Sure. That, that helps. That is very helpful regarding cost, cost savings. The second one was regarding consumer and away-from-home products for the second half of the year, what are the expectations there? You already mentioned regarding price and regarding volume and, and regarding the competitive environment, but overall, what are you expecting for, for the remainder of the year? Thanks. Got it. Yeah, you know, as we said, we're confident that our sales will pick up during the second half of the year, both in consumer products and professional, supported by relevant innovations and our executive- and our effective commercial execution. As I mentioned, there was a little bit of a slowdown in our categories, second quarter versus first quarter. Quite frankly, at this point, we don't know if that has to do with social programs by the government being handed out in the first quarter of the year before the elections, for legal reasons. And that had a little bit to do with that slowdown, and when that comes back, our volumes should normalize. That seems to be the—we believe that's gonna be the case, but it remains to be seen. But categories continue to show growth, and our shares are healthy, and given what we're doing, we expect ourselves to pick up in the second half of the year. Perfect. Thanks a lot. Have a nice day. Thank you, Antonio. As a reminder, if you'd like to ask a question today, please press star one. We'll take our next question from Juan Guzmán with Scotiabank. Hi, good morning, Paulo, Xavier, and all the team there. Congrats on the results, and thanks for the, the remarks and the, the space for questions. I have a follow-up on competition dynamics. We know that in the past, price activity has been an issue as competitors held price increases. So what have you observed in terms of your recent market share performance on this front? And if I may, another question, I have here is regarding capital allocation and your buyback program, what are the factors you consider before you start executing it? I mention this because obviously, at current levels, the company is trading at a significant valuation discount. So I'd like to pick your brain and hear your thoughts on it. Thank you very much. Thank you, Juan. Thanks for the questions. Look, in terms of competition, again, we're very pleased that notwithstanding the fact that we, one, pushed prices forward on our tissue businesses, and two, we were more careful on the summer promotional season, which some of our competitors went full throttle. We didn't, because, again, we believe this has to come more in line with the past. And our shares have held up nicely, so that talks to the strength of our brands, the strength of our execution, and the quality of our products out there. So we're very pleased with that, and as we believe some of the competitors that have not moved forward might do so going forward. Given that on our innovation pipeline and focus on growth, again, we believe that growth will pick up going forward. So very, very happy with the performance so far. Yeah. Hello, Juan. As, as to the buyback program, I, I think that the only thing we can comment at this point is we have the authorization for MXN 1 billion for the year, and we have not started buying back shares. I really cannot comment on, on, on the plans on how we will do it. But it is true that, as you say, we believe the price is severely undervalued, and we will continue to push to get great results and take other actions to make sure that at some point, the share price reflects the true value of the company. No, I understand. Thank you very much. Good stuff, and thanks for questions. Thank you. Thank you. Our next question comes from Jeronimo de Guzman with INCA Investments. Hi, good morning. Just had a few questions here. Maybe just starting with, you mentioned you had the increase in tissue. Just wanted to understand what percent of your mix, more or less, is tissue? Sure, Jeronimo. Tissue of our sales, it's, when you put it all together, is roughly 35% of our sales. Okay, and is there a reason why the increase was only in tissue? Is it because that one's more impacted by the virgin pulp, or are you expecting to also increase the other product pricing? No, no, that's, that's exactly right. We moved on tissue because we started to see pulp moving. And as I said, it's moved for the past 7-8 months. Now it seems all the experts are thinking that it's gonna turn around and start to come down, and that's certainly what we're expecting. In most of our other categories, we haven't experienced any price pressures, and we don't see any significant price pressures going forward. But even in those cases, we will continue to look for opportunities to improve our pricing and very importantly, our mix. And that's why I mentioned that our innovation is very, very focused on improving our super premium, premium, never value tiers, so that we can improve our mix in our different categories. I see. So the other categories just have less virgin pulp within their mix, that's. And then maybe more recycled? Yeah, I mean- Okay. Yeah, virgin pulp is only really half, it's an important component of our tissue business. And then tissue business, just to reiterate, to make sure everyone understands this, two-thirds of what goes into our tissue business is recycled fiber. And recycled fiber has been a positive when it comes to costs, and we expect it to stay that way. It's only one-third, that's pulp, that's been under pressure, and that represents about 10% of costs. When you take a look at personal care, they do use a little bit of materials derived from pulp, but the percentage they use is very small. I see. Okay. Got it. And then in terms of that, what you mentioned in terms of the recycled fibers, not really following the, the virgin fiber, fibers and having their own dynamic, any thoughts on kind of, yeah, what, what's driven kind of that different, dynamic, where one has been a lot more stable? Like, it's any, any, any kind of color on the trends you're seeing in, in recycled fibers and why we're not seeing, those increases there? It's a very good question, Geronimo, because in the past, they haven't always gone together, but roughly, they followed a little bit of the same trait. It hasn't been the case this time because I think the increases in pulp had to do with, 1, early demand in the year by China. 2, a lot of maintenance work and even shutting down some plants by some of the suppliers to keep the market tight, as they were feeling there was demand. But you can't keep that going for too long, so now we're seeing all of that capacity come back on board, plus additional new capacity, and now the Chinese folks are on the sidelines, so that's putting a lot of pressure on pulp. I guess on the fiber side, the market was trying to realize whether the pulp price increases were gonna withstand and have the substance behind them, or were gonna start cracking like it seems it's gonna start happening. So that's probably why it diverged. And we're happy with it, and again, we use two-thirds virgin, and we continue to make changes in our manufacturing capacity to use even more recycled fiber and other materials, so that we can always use the best mix out there when it comes to cost and product performance. Yeah, that makes a lot of sense. Thank you. And then on the OpEx, you mentioned kind of the bigger increase or the increase that it has been ahead of sales. Maybe some additional color on that, and I think you mentioned that you do expect that to be a little bit less of a pressure in the second half. So yeah, just wanted to get more color on the operating expenses. Yes, as we mentioned, the most significant increase there is distribution expenses. That's the one that has been growing ahead of sales in the past quarters. But as all the investments that we have been doing, both to improve our manufacturing and converting footprint, as well as to increase the efficiencies of our trucking fleet, we are starting to see that coming down, and that should hopefully not continue to be a drag in the coming quarters. It'll be a little bit of a pressure, Jeronimo, but as Xavier mentioned, all of the actions we've taken to bring our manufacturing closer to where the demand is, and to increase our fleet size and improve our efficiency of our trucking operation, because it's been hard in Mexico to find operators and to find enough distribution partners. So as we are improving as we speak, that the size of the fleet, that'll already started to show results this past June, and we expect that'll continue in the third quarter and be completely materialized by the fourth quarter. So, eventually, little by little, this will be less of a headwind, and we're very confident that by fourth quarter next year, it's gonna be a tailwind, and it'll allow us not only to bring down costs, but to provide better service to our clients. So we'll continue to move very aggressively on that front. Great. Thank you. Sorry, just one last clarification. You mentioned in your comments that you expect margins for the year to be at the high end of the target range, and then you also mentioned that for throughout next year, but I wasn't sure for next year, if you're also expecting them to be on that high end or more kind of within the, within the target range? Hard to say. I mean, as you say, for this year, we expect them to stay in the upper side of the range. Let's see what happens with costs going into next year. Again, if pulp starts to come down as we expect it to, then we should be able to continue to post very, very strong margins next year within the upper range. But hard to tell at this point. We need to see how the different commodities markets behave and the competitive scenario, and then we'll be able to give you more color on that come the fourth quarter of this year. But we'll continue to be within our range. We're very, very confident with that. Okay, sounds good. Thank you very much. Thank you. It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks. Thanks again for participating. Thanks for all of your great questions, and hope you have a terrific summer, and please feel free to reach out should you have any additional comments or questions. Thanks again! This does conclude today's program. Thank you for your participation. 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