Sigma Foods (SIGMAF) Q3 2024 earnings summary

Executive summary

• ALFA completed its transformation into a single-business structure focused on Sigma, following the approved spin-off of Alpek and previous divestitures of Axtel and Nemak, finalizing a multi-year shift from a conglomerate to independent businesses.

• Shareholders approved the Alpek spin-off, with completion expected in 2025; ALFA shareholders will receive shares in the new entity, Controladora Alpek.

• Sigma achieved its 14th consecutive quarter of year-on-year sales growth, with record volume and EBITDA, and strong performance across all regions.

• Advanced a capital increase of Ps $7,952 million (~US $400 million), with proceeds expected in November 2024 to pay down US $575 million in parent-level debt.

• Received consents from over 91% of bondholders to amend Senior Notes due 2044, facilitating the Alpek spin-off.

Financial highlights

• Sigma delivered all-time high consolidated EBITDA for Q3, with US$281 million, up 10% year-over-year, and record-breaking volume and margin expansion in the U.S. and Latin America.

• Consolidated revenues for 3Q24 were US$2,243 million, nearly flat year-over-year; Sigma's revenues were US$2,222 million, up 1% year-over-year.

• Alpek reported 3Q24 comparable EBITDA of US$218 million, up 37% year-over-year, and raised its full-year EBITDA guidance by 13% to US$675 million.

• Net debt decreased by US$175 million in 3Q24, with a consolidated net leverage ratio of 2.9x.

• Sigma's growth initiatives, including plant-based proteins and e-commerce, posted substantial year-on-year revenue growth.

Outlook and guidance

• Sigma expects a further US$50 million upside to its 2024 EBITDA guidance, supported by strong operational momentum.

• Alpek's 2024 comparable EBITDA guidance was raised 13% to US$675 million due to improved margins and stable demand.

• ALFA targets a steady-state net leverage ratio of 2.5x Net Debt to EBITDA.

• No consolidated guidance will be issued for ALFA post-spin-off; Sigma will account for consolidated results going forward.

• Alpek spin-off expected to complete in 2025, with share distribution and listing pending regulatory approvals.