ALPEK (ALPEKA) Q4 2024 earnings summary

Executive summary

• Comparable EBITDA for 2024 reached $699 million, surpassing both original and revised guidance by up to 17%, driven by higher container freight costs, stable reference margins, and disciplined capital allocation.

• Key initiatives included cost reduction, operational efficiency, and a disciplined capital allocation strategy, generating $104 million in free cash flow.

• Achieved $75 million in cost savings for 2024; further actions, including the Beaver Valley EPS facility closure, are expected to bring annualized savings to $100 million by mid-2025.

• Focused on deleveraging, with leverage ratio reduced to 2.9x and a target of 2.5x, positioning for gradual industry recovery.

Financial highlights

• Full-year volume rose 2% year-over-year to 4.75 million tons, with Q4 volume at 1.12 million tons, down 8% sequentially due to seasonality.

• Q4 comparable EBITDA was $168 million; reported EBITDA was $109 million, up 106% year-over-year, impacted by a $52 million negative inventory adjustment.

• Full-year reported EBITDA was $646 million; dividend yield reached 9%, with total payments of up to $170 million.

• Net debt at year-end was $1.88 billion, with a net debt-to-EBITDA ratio of 2.9x, down from 3.7x at the start of the year.

• Operating free cash flow for the year was $104 million; full-year CAPEX was $121 million, 19% below revised guidance.

Outlook and guidance

• 2025 guidance assumes stable demand and reference margins, with Asian PET margins at $270/ton and a 2% volume increase.

• Comparable EBITDA for 2025 is projected at $625 million, reflecting lower expected container freight costs.

• Annual CapEx is projected at $150 million, with $100 million for maintenance and $50 million for strategic projects, including EPS expansion in North America and PET sheet capacity in the Middle East.

• No material investment in working capital is anticipated for 2025, supporting higher operating cash flow despite lower EBITDA.

• 2025 priorities include further structural cost reductions, cash flow generation, and balance sheet strength.