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Operator: Good morning. Welcome to the Sigma Foods Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. A replay will be available on Sigma Foods Investor Relations website following the conclusion of today's event. I will now turn the call over to Hernan Lozano, Sigma's IRO.
Hernan Lozano: Thank you, operator, and good morning to everyone joining us today. Before we begin, please note that today's discussion will include forward-looking statements. These statements are based on currently available information, expectations and assumptions, which are subject to risks and uncertainties. Actual results may differ materially. Sigma Foods undertakes no obligation to update forward-looking statements. It is my pleasure to participate in today's call together with Rodrigo Fernández, Sigma's CEO; and Roberto Olivares, Sigma's CFO. Our agenda today is straightforward. Rodrigo will provide a strategic and operational overview. Roberto will then take you through the financial results and 2026 guidance. We will conclude with a Q&A session. With that, I will turn the call over to Rodrigo.
Rodrigo Fernández Martínez: Thank you, Hernan, and good morning to everyone. I'm pleased to join you today for my first earnings call. I also look forward connecting with many of you in person through a range of forums as we step up the investor engagement agenda initiated last year. I want to begin by acknowledging the exceptional work of our more than 47,000 members worldwide. Their execution, resilience and commitment enabled a strong finish to 2025 across regions and categories. Let me highlight a few consolidated performance points. First, our revenue surpassed $9 billion for the first time, reaching $9.3 billion in 2025. Second, we delivered on our EBITDA guidance of $1 billion, making 2025 the second consecutive $1 billion year. And third, our balance sheet remains strong, supported by robust investment-grade credit ratings. A key advantage continues to be Sigma's diversified business model across regions, channels, brands and categories, which helped us navigate dynamic market conditions. Looking at performance by region. Mexico delivered outstanding results driven by commercial effectiveness and robust execution. Retail channels remained the primary growth engine, consistent with trends throughout the year. Dairy-led category performance and value brands gained momentum across income segments. In Europe, our team executed exceptionally well as we navigated temporary capacity constraints stemming from the Torrente flooding, particularly early in the year. We protected market presence and customer service levels by relocating production across our network and trusted partners. Importantly, underlying profitability in Europe continues a clear upward trajectory. Comparable EBITDA surpassed $100 million for the first time since 2021. We also advanced our strategic European agenda by restructuring the Fresh Meat business in Spain. We signed an agreement that further sharpens our focus on branded products and improves pork supply traceability. In the U.S., the year was marked by continued penetration of Hispanic brands in mainstream channels, driven primarily by raising performance in key national accounts. Market dynamics remained fluid as consumers adjusted shopping patterns across channels. In Latin America, profitability continues to recover gradually with sequential EBITDA improvements driven by operational normalization effects. While cost pressures persisted in some countries, we're encouraged by continued operational discipline. Shifting gears to our strategic priorities. Our purpose, delicious for better life sets the direction and our strategy turns into action, grounded in 4 core priorities. First, grow and defend the core. We will continue doing what Sigma does exceptionally well on a large scale, serving consumers with trusted brands, strong execution and a multichannel commerce presence. Second, developing new sources of revenue. This includes core adjacent innovations and disruptive opportunities to the growth business unit, which is already demonstrating strong scaling potential in initiatives such as high-protein snacking and direct-to-consumer concepts. Third, strengthening the organization. This pillar is about building the culture and capabilities that help each team member perform at their best. It also includes investing in systems, modernization, marketing and consumer-centric innovation platforms like the studio. And fourth, exploring the future. We're looking ahead to longer-term opportunities in food science, responsible protein and consumer well-being priorities that will shape Sigma's next era of growth. Looking ahead into 2026, we expect to grow co-branded volume supported by an improving raw material environment and solid execution. We also strive to expand margin driven primarily by stabilization in protein markets and continued profitability improvement in Europe and we will deploy CapEx high-return projects, capacity expansion in the Americas and capacity recovery in Spain. In sum, we anticipate another year of solid performance. In this context, I'm pleased to inform you that the Board of Directors approved our plan to propose at our Annual Shareholders Meeting, 2026 cash dividends totaling $150 million payable into installments. Dividends will continue to be a key component of our capital allocation strategy. With that, I will turn the call over to Roberto.
Roberto Rolando Olivares Lopez: Thank you, Rodrigo, and good morning, everyone. I will walk through Sigma's financial performance and 2026 guidance. In the fourth quarter of 2025, Sigma Foods revenues were $2.5 billion, up 12% year-on-year and 2% sequentially. This was driven by favorable FX translation, selective price actions and a stable volume. In Mexico, revenues increased 21% in U.S. dollars and 10% in Mexican pesos, supported by selective pricing and a solid performance led by our dairy category. European revenues were up 11% in U.S. dollars and 2% in euros. A healthy top line figure reflected branded volume growth and successful allocation of production from the plant that was flooded in 4Q '24. Revenues in the United States and Latin America increased 1% and 2% year-on-year, respectively. For the full year, revenues reached $9.3 billion, up 4% year-on-year. Importantly, 2025 volume held steady at a record high level despite pricing actions taken to mitigate higher raw material costs. For the fourth quarter, EBITDA was $278 million and comparable EBITDA was $284 million, up 34% year-on-year, driven primarily by Mexico and Europe. For the full year, comparable EBITDA was $1 billion, in line with guidance and the second highest in Sigma's history. Moving on to key cash flow items for the year. Net working capital posted $64 million recovery in 4Q '25, driven by seasonality. For the full year, we invested $208 million, primarily due to higher raw material prices. CapEx was $159 million in 4Q '25 and $362 million for the full year, up 47% from 2024. This reflects capacity expansions in Mexico and the United States, replacement capacity in Europe and modernization of systems and infrastructure. Sigma Foods paid $35 million in dividends during 4Q '25 for a full year total of $119 million, aligned with Sigma's strong cash generating capacity. Sigma Foods ended the year with a solid financial position. Net debt was $2.7 billion, up 9% year-on-year, reflecting investments in net working capital and CapEx. Net debt-to-EBITDA was 2.5x, in line with our long-term target. We closed the quarter with $643 million in cash. Total liquidity, including committed credit lines was approximately $1.5 billion. We are currently exploring opportunities in the Mexican bond market to refinance 2027 maturities and further strengthen our debt profile. This financial strength allows us to continue investing with confidence. Let me now walk you through our 2026 guidance. FX conditions have been favorable in recent months. For planning purposes, we consider 2 FX scenarios: a currency-neutral base case using the 2025 average exchange rate of MXN 19.2 per U.S. dollar and an alternative currency-specific scenario using MXN 18 per dollar. These assumptions are intended to illustrate a reasonably range. We expect protein markets, particularly turkey to gradually trend downward from current elevated levels. As reference, year-to-date prices of turkey breast have decreased 12% and turkey thigh is flat. Volume is estimated to grow approximately 2% with improving trends across regions. Revenues are expected to rise by 4%, supported by mix improvements and balanced pricing actions designed to grow volume as raw material pressures ease. We expect EBITDA to increase 5% year-on-year, driven by all regions. In particular, Europe is expected to deliver double-digit growth in 2026. CapEx is estimated to increase approximately 27%, totaling $460 million. The year-on-year increase is mainly explained by the planned investment for Torrente capacity replacement in Spain, covered primarily by insurance reimbursements received in 2025. With that, I will now turn the call back to Hernan for Q&A. Hernan?
Hernan Lozano: Thank you, Roberto. We will open the line for questions. Please limit yourself to one question and one follow-up, so we can address as many participants as possible. Operator, please?
Roberto Rolando Olivares Lopez: [Operator Instructions] Our first question comes from Rodolfo Ramos of Bradesco.
Rodolfo Ramos: Congratulations on the very strong results. My question is related to your 2026 guidance. And I'm hoping you can help me here square the circle on your guidance, which seems maybe a bit conservative. I understand the sensitivity to the FX, and it's great that you included these scenarios for different currency levels. But just given how well volumes at top line behaved, particularly in Mexico and how some raw materials seem to be improving, I'm trying to gauge how conservative you are. Is it something that -- is it something to do with how you see volumes performing or the raw materials in '26? I don't know if you're also expecting anything incremental from the -- associated with the World Cup. So just trying to get us a better sense of what we've seen maybe this year and trying to get a little granularity on your guidance.
Roberto Rolando Olivares Lopez: Rodolfo. This is Roberto. Thank you for your question. Yes. So maybe I think it will be good to talk a little bit about the assumptions, the main assumptions in the different regions. In general, we see volume growing in all regions. In the case of Mexico, the retail is expected to grow low single digits. And we see better dynamics that we have -- as we saw in the last quarter of the year in the dairy segment, particularly in the yogurt and cheese. We see a recovery in the foodservice channel in Mexico coming from more clients, but also penetrating those actual clients and some additional growth coming from the World Cup, particularly in the cities where there were going to be some matches. Our main focus in the case of Mexico, particularly in foodservice coming from a year 2025, where we have a lot of inflation coming from raw materials is to focus on volume. So in the case and to your point that there's going to be less pressure coming from raw materials, maybe is to focus and to balance volume in the long run. In the case of Europe, we are seeing some volume growth coming mainly from branded core segments and better mix, particularly in Spain as we focus on initiatives to foster higher-margin portfolio. We also see better raw materials, particularly right now in Spain due to that at least in the short term, there's some export restrictions in Spain due to the ASF, the African swine fever that's where -- that is happening right now in Spain. In the case of the U.S., we expect a volume growth coming mainly from Hispanic brands as we continue penetrating the mainstream channels, and we look for more clients. We do expect a slight margin increase as well in the U.S. coming also from better mix, particularly getting into the underpenetrated categories. We -- as you know, we are the #1 hot dog in the U.S., but there's still some room to go in terms of ham and poultry and other categories. And lastly, Latin America in terms of volume is where we see more growth for next year. We're seeing mid-single-digit volume growth in Latin America, particularly coming from a soft year in 2025, where we have some supply chain disruptions, and we do expect to capitalize on those corrections during 2026.
Rodrigo Fernández Martínez: And Rodolfo to complement, when you think about the raw materials, you might see, for example, turkey getting a little better in the short term. But at the same time, you see things like the winter storm that happened in the U.S. recently and the production of turkey for the last week was even smaller. So with raw materials, you always have to be thinking what could happen and be prepared for that. And I would say that even though -- even if the raw materials go down, we have to see or the way we see things, it's from 2 perspectives. One, it's in the short term and in the long term, and we need -- and we think and we need to deliver on both. So when there is a big cost increase, we definitely think about marginal contribution per unit, and we want to maintain that, and we usually increase prices to make sure that happens. But for example, last year, we increased prices to offset a cost of more than $400 million. And we also have to think of the consumer in the long term. And with that in mind, like Roberto said, we also want to think about volume to make sure that we deliver in the short and the medium and the long term.
Operator: Our next question comes from Renata Cabral of Citi.
Renata Fonseca Cabral Sturani: My question is regarding the U.S. We are receiving several questions related to potential impact on GLP-1 on the portfolio of the company. Actually, as the company is exposed to protein, my expectation is actually that could help in the U.S. So my question is if the company is already seeing that or it's a trend that should increase in the future in terms of innovation. The company is focusing on that because of the trends naturally much more broadly in the U.S., I imagine and then in the other countries.
Rodrigo Fernández Martínez: Thank you, Renata, for the question. Let me answer it from 2 timelines in the short term and in the long term. In the short term, definitely, GLP users come from fat and muscle and then the protein intake is going to play an important part of muscle preservation efforts. So we're well positioned to benefit of such trends of a high protein portfolio that we have within the company. And -- but in the long term, I talked at the beginning about 4 pillars for our strategy. And the last pillar, it's about exploring the future. And one of the things that we're looking in the future, too, it's responsible protein. And there are 3 things that we're looking for, for the long term. We want to make sure that we have platforms that taste amazingly because that's very important, delicious for a better life, it has to be delicious. Two is we want them to be a high-quality protein. So at the end, there are 9 amino acids that only come through food, and we want to make sure that our proteins have those 9 amino acids that the body needs to come from food. And third, we want to make sure that those products can be better for the environment. And I'm talking about CO2 emissions. I'm talking about water consumption. So at the end, we do see a trend in the short term, but we're also preparing the company for the long term thinking that this is going to be important going forward.
Renata Fonseca Cabral Sturani: The second question, it's about Europe. If you can help us elaborate a little bit about the trends this year, especially because we will have a different base because of the transaction that the company announced in the end of last year. So what are the expectations in terms of especially EBITDA improvement, but any additional color on that would be helpful.
Roberto Rolando Olivares Lopez: Renata, this is Roberto. Thank you. So in general, in Europe, let me talk briefly about trends that we're seeing. We -- last year, we saw branded volume growing across the different segments. We also saw a better dynamics in the pork market during the year, but mainly at the end of the year, as I explained, due to excess supply of pork in Spain given the export restrictions that Spain is passing right now due to the ASF. We announced the divestment of our slaughterhouse business by the end of last year, and we're in the process of getting all the authorization from the authority. We are planned to get those during the 1st Q of 2026. If that happens or when that happened, we're going to have a better alignment in terms of the focus on the core segments on branded products, particularly and also having more traceability or securing the traceability of our pork in Europe.
Rodrigo Fernández Martínez: And if I can just complement very briefly on that -- this year, we had growth, as Roberto mentioned, on branded products, and we have very nice also control of SG&A. So at the end, we're in a position that now we can think about growth. We can think about how can we do better, grow more. We have been thinking about some innovations in different geographies, very focused. And what we like a lot about Europe, about trends in Europe is that it's a way to see into the future in some of the other geographies, what happens in Europe later on and happening in the U.S. and later on in Mexico and Latin America. So we're very happy and eager to have -- to find those innovations and make sure that they start in Europe and then they can continue in the rest of the company.
Operator: Our next question comes from [ Enrique Moreo ] of Morgan Stanley.
Unknown Analyst: I would just like to do a quick follow-up in the U.S. If you could just explore a bit how the channel outside the big retailers is performing and how you're seeing the market share trends in the whole portfolio or in the whole channel mix that you have would be very helpful. I ask that because we see a little bit of a mismatch in the consumer scanner data that we have on bigger retailers. So just to see a broader picture of what you're seeing in the U.S. and how you see your strategy on that market going forward as well?
Roberto Rolando Olivares Lopez: This is Roberto. Let me first put some context. 2025 for the U.S. was the second highest EBITDA in U.S. history. And also the fourth quarter was a record fourth quarter for the U.S. In the U.S., we have, as you mentioned, 2 different businesses. We have what we call the national brand business, which is mainly our brand Bar-S and the Hispanic brands business. In the case of the Hispanic brands, we have been -- we used to sell mostly to independent or specialty retailers focused on Hispanic population. And we used to grow a lot in that segment. Last year, as let me say, migration policy change in the U.S., those segments started to have softer numbers. But we increased a lot last year, our presence in the mainstream channel with the Hispanic brands portfolio. And we reached the big retailers with our Hispanic portfolio, and that helped us a lot offsetting the lower consumption numbers in the independent retailers. In the case of our national brand business, our Bar-S brand, -- we -- I mean, last year, we have tough competition coming mainly from private label, but we're focusing right now on revitalizing the category through innovation.
Rodrigo Fernández Martínez: Let me, Enrique, just go a little further on the last comment from Roberto. We're the largest in hot dog in the U.S., and we plan to maintain that. And what we want to make sure is that we have the best product cost in the market -- best quality product versus cost in the market. We want to be the ones that consumers think about and not necessarily on product level. And we're doing things to get that. So for example, in sausages, we're just launching a new package. And usually, you have 6 links in 1 package. But when you eat them, you don't need 6 of them. You might need 1 or 2. So we have the IEP for this package where you can have 3 separate pieces tied together in the same package. So you can open a third and just eat those 2 links and then open another third and so on. So at the end with that, we want to make sure that the cost benefit we're the best one. And with that, we hope to be growing and taking some share from private label in the coming time.
Operator: Our next question comes from Andrés Ortiz of BTG Pactual.
Andrés Ortiz: I would like to ask you about the tax rate we saw this quarter. I believe it was close to 45% and we are already past the Alpek spin-off. So I just want to understand what happened here? And what will be the correct assumption for 2026 for tax rate?
Roberto Rolando Olivares Lopez: Andrés, this is Roberto. So the main difference in the tax rate in the quarter has to do with the FX gains or losses due to the fluctuation of the MXN in regard to 2026, particularly in terms of cash flow tax, we do expect to have a similar amount of tax payment during 2026 that we have on 2025.
Andrés Ortiz: So it's -- so if we continue to see like this level of appreciation, we will continue to see that or...
Roberto Rolando Olivares Lopez: If we continue to see what, I'm sorry?
Andrés Ortiz: This level of appreciation of the MXN, we will continue to see this like large.
Roberto Rolando Olivares Lopez: So yes. So if the Mexican peso maintains in this level, there should not be many difference. If it continues to appreciate, there could potentially be an effect on that.
Andrés Ortiz: And if I could do a second question. Could you remind us like the effect that an appreciation of the Mexican peso has on the margins in Mexico and how it benefits or affects consolidated EBITDA?
Roberto Rolando Olivares Lopez: Sure. So in terms of -- so we have 2 effects. The first one is the conversion effect. In terms of conversion, MXN 1 change versus the U.S. dollar impacts around $30 million to $35 million in conversion.
Operator: Our next question comes from Juan José Guzmán of Scotiabank.
Juan José Guzmán Calderón: Congrats on the results. A quick one on Latin America. It was probably the only division that didn't perform as well as the others this quarter. So can you tell us a little more about what's going on there, both from the production standpoint and price pass-through angles?
Roberto Rolando Olivares Lopez: This is Roberto. Yes, in terms of Latin America, last year, we have some impacts, particularly in some countries of Latin America regarding supply chain disruptions coming from problems in raw materials and demand planning. We -- as we move through the year, we solve those problems, and we actually saw a sequential improvement in EBITDA through -- coming from the second quarter. We do expect those problems to be to -- I mean, those problems ended last year. We expect a significant better result in 2026 coming from Latin America. If you see, as I explained in my initial remarks, in guidance, we do expect higher volume in Latin America, mid-single digits, coming from solving those problems.
Juan José Guzmán Calderón: And if I can ask a follow-up question regarding your guidance. Can you tell us what kind of specific assumptions or expectations you're dealing with when it comes to input costs specifically in your guidance? At first glance, it seems to us that you are not incorporating much in input cost reductions. For example, turkey coming down or you're kind of expecting a lower contraction in the cost of turkey. What are you dealing with specifically for your guidance?
Roberto Rolando Olivares Lopez: Thank you, Guzmán, yes. So we do are expecting or we consider in our guidance that prices of raw materials, particularly turkey, gradually trend down in 2026. However, we have seen that those prices started to decrease, particularly turkey a little bit sooner than we expected. But we are -- as Rodrigo mentioned, we right now are focused on volume this year. So we will take into consideration what is happening with the FX and what is happening in raw materials in that formula in order to grow volume this year.
Rodrigo Fernández Martínez: And then we have people doing revenue management. And as I mentioned at the beginning, we want to do both. We want to make sure that we can deliver on the short term and we can deliver in the long term. And the cost increase that we were able to pass last year was significant. And we will look at every single product in detail per month just to make sure that we can both maintain or grow margins a little, but at the same time, we can get some volume increases that with that, we can do more sustainable growth for the company for the medium and long term.
Operator: Our next question comes from Fernando Olvera of Bank of America.
Fernando Olvera Espinosa de los Monteros: I have 2 questions. The first one is related to Europe. I believe, Roberto, you mentioned before that you are expecting volume growth in Europe. Does that -- I just want to be sure if that includes the agreement with Grupo Vall.
Roberto Rolando Olivares Lopez: Fernando, so in case of volume growth, it's coming mainly from our core segments in our branded categories. The agreement with Grupo Vall will make that we will divest or not consolidate our Fresh Meat business. If that happens, we are going to divest a part of portfolio that will improve margin in terms of EBITDA margin. But that means that volume -- I mean, we're going to reduce that amount of volume, but we should produce that amount of the base as well.
Rodrigo Fernández Martínez: Exactly. So Fernando, we're not -- the restructure is not included in our guidance.
Fernando Olvera Espinosa de los Monteros: And my other question is regarding your gross margin. I mean, considering that you're still facing cost pressure, I mean what was the driver behind the gross margin expansion this quarter?
Roberto Rolando Olivares Lopez: Sure. So I mean, it comes mainly from pricing actions that we have done through the year. As Rodrigo mentioned in one of the answers, we -- this year, we confront close to $400 million of additional cost in the operation. So we have to increase prices in some regions significantly to offset that effect. As we move through the quarters, we have the reflection of those price increases. So that's the main focus or our increase in gross margin.
Operator: There being no further questions, I would like to return the call to management.
Hernan Lozano: Thank you, operator. And it seems that we have a couple of questions from our chat. So this question is coming from Froylán Méndez at JPMorgan. Thank you for your question, Froy. And the question is, how should we think about capital return to shareholders under the simplified structure? Can we expect a higher payout in the short term? What needs to happen? Sure.
Roberto Rolando Olivares Lopez: Thank you, Froylán. This is Roberto. In terms of dividends, Sigma Foods will continue to our long track record of cash distribution to shareholders, supported by our strong underlying cash flow generation. As you know, we announced yesterday in the report that we're proposing to the shareholders meeting to distribute a total of $150 million of dividends this year to be paid into installments. So as we mentioned, this is important for us. We -- our dividends are aligned to maintain our long-term target of 2.5x net debt-to-EBITDA ratio.
Hernan Lozano: So that was the first question from Froylán. And the second question is cost at the holding level. How should we think about this cost component going forward?
Rodrigo Fernández Martínez: So thanks for the question. So Sigma Foods, it's a company that -- it's about food. So what we have today, it's more than 99% of what we have today is food. We think about food, we talk about food, and that's all we do. The structure that we have today is to manage the food business. So you shouldn't see a difference between Sigma Foods and Sigma that you used to see. If you think about years in the past, that was different, that was a difference, and it was about transformation. But the structure that we have today, we're just converged totally there. And you can think today Sigma Foods as a food company overall.
Hernan Lozano: Thank you. So that concludes our Q&A section. I would pass the microphone back to you, Rodrigo, for closing remarks.
Rodrigo Fernández Martínez: Thank you. I want to close by reinforcing a few key points. First, Sigma business is strong and resilient, powered by a diversified platform and team that consistently delivers under dynamic conditions. Second, our long-term strategy is clear. We're focused on defending the core, developing new sources of revenue, strengthening our organization and exploring the future of food. And third, we remain committed to profitable growth, operational excellence and continuous innovation. Finally, I want to thank our investors and partners for their continued support. We look forward to updating you on our progress next quarter, and thank you for your interest in Sigma Foods.
Operator: This concludes today's conference call. You may disconnect.