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Good morning, and welcome to the Sigma Foods Second Quarter 2026 Earnings Conference Call.

[Operator Instructions] As a reminder, today's call is being recorded. The replay will be available on Sigma Foods Investor Relations website later today.

I will now turn the call over to Hernan Lozano, Sigma Foods IRO.

Thank you, operator, and good morning to everyone joining us today. Further details regarding our second quarter results can be found in the press release and earnings presentation that were distributed yesterday. Both documents are available in the Investor Relations section of our website.

Before we begin, please note that today's discussion will include forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results may differ materially. Sigma Foods undertakes no obligation to update these statements.

It is my pleasure to participate in today's call together with Rodeo Fernandez, CEO; and Roberto Olivares, CFO. Today's agenda is straightforward. Rodrigo will start a strategic overview. Roberto will follow with a financial review and we will conclude with Q&A.

With that, I'll turn the call over to Rodrigo.

Thank you, Bernard, and good morning, everyone. Sigma Foods continued to build on the strong start of 2026, delivering record second quarter volume, revenues and comparable EBITDA. This good performance reflects the stability of our diversified business model and reinforces active trajectory towards our financial objectives.

During the quarter, we also made meaningful progress on several strategic priorities by investing in strengthening our manufacturing network and complementing our portfolio through a disciplined acquisition. In Europe, we reached important milestones in our capacity recovery plan. We advance in the start-up process of new vacant production capacity at Laguea plant and continued the construction of our new facility in Valencia to begin production in summer of 2017 as planned. Together, these assets will restore the capacity loss in the talented plant floating and support the long-term profitability and growth of our European business.

In the United States, we completed the acquisition of Royer Wood Foods, a sausage producer with a leading brand in the outer region. This bolt-on transaction complements ongoing organic initiatives, including a recent nationwide Sigma product launch, as we expand our participation in the sausage category, which represents a high potential opportunity for our U.S. operations.

In addition to disciplined investment in return projects, returning capital to shareholders is a core component of our capital allocation strategy with cash dividends representing the primary mechanism. During the second quarter, we paid the first installment of our approved annual cash dividend, totaling $76 million. The segment installment will be banning of to. We also executed opportunistic share buybacks, reflecting our constructive view of the underlying value of the business, particularly in the context of the recent share price trends. From a valuation perspective, we're actively engaging with consumer sector investors and analysts to strengthen awareness of Sigma Foods as a leading global food company. These efforts have contributed to expanding our sell-side coverage and enhancing our reach within the investing community and supporting a greater understanding of our long-term value proposition.

We appreciate the opportunity to connect with all market participants. As we reflect on the first half of 2026, Sigma Foods has made encouraging progress across multiple fronts. Our diversified business is well positioned to navigate a food macro environment where we continue to see a healthy balance between external tailwinds and headwinds. Looking ahead, we have greater confidence in delivering our full year EBITDA guidance of $1.1 billion. With that, I will now turn the call over to Roberto for a more detailed review of our first quarter financial results.

Thank you, Rodrigo, and good morning, everyone. The second quarter represents another period of solid consolidated results driven by consistent execution and the positive effect of currency translation. Revenues were up versus second Q '25 and increased 10% in the first half of the year, reflecting moderate volume growth stable currency-neutral average prices and a favorable foreign exchange conversion effect.

Importantly, comparable EBITDA was 17% higher, both on a quarterly and accumulated basis. with strong contributions from Mexico, Europe and Latin America.

Let me walk you through key results by region. Mexico delivered another outstanding performance with record high second quarter volume, revenues and EBITDA. In the current consumer environment, we continue to see different volume dynamics by channel, categories and brand segments with a stronger momentum in retail relative to food service, in the dairy category and in value-oriented brands. Positive volume growth, improving input costs and a favorable currency translation effect boosted accumulated EBITDA by 23% versus the first half of 2025.

In Europe, volume and comparable EBITDA continued to grow, supported by the fresh meat business, which benefited from a temporary decline in the light hog prices in Spain. The business delivered its highest second quarter comparable EBITDA since 2021, reflecting the continued progress of our turnaround efforts. Due to the comparable EBITDA is 66% higher than the first half of 2025.

In the United States, seasonal trends supported sequential increase of 12% in volumes, 9% in revenues and 12% in EBITDA, excluding the integration of Royal Wood Foods. Toward the end of the quarter, we also observed early signs of year-on-year improvement in monthly volume trends. We expect further improvement in year-on-year trends during the second half 2. Also, the integration of Royal Wood Foods is advancing as planned with results during the first 2 months of operation in line with our expectations.

On a final note, Latin America continued its positive momentum, delivering record second quarter volume and the fourth consecutive quarter of sequential EBITDA improvement, supported by better price cost alignment and operational efficiencies across the region.

Moving on to selected items below the EBITDA line. Our accumulated net financial cost was $123 million, compared to $57 million in the first half of 2025. This increase was primarily driven by lower foreign exchange gains, reflecting a more stable Mexican peso in the current period. Accumulated net income was $164 million compared to $209 million in the first half of which benefited from extraordinary items, including insurance reimbursements related to property damage as well as higher foreign exchange gains.

Let me close with a brief comment regarding our strong balance sheet. Net debt ended the quarter at approximately $2.9 billion, up EUR 78 million quarter-on-quarter, reflecting primarily a noncash foreign exchange conversion effect related to our peso-denominated debt.

Our net leverage ratio stood at 2.7x at the close of the second quarter. We expect this key metric to trend lower closer to our long-term target of 2.5x by year-end, supported by strong cash generation. Simba Foods remains well positioned to continue investing in its business model. backed by solid cash flow and ample liquidity.

And I now turn the call back to Hernan for Q&A session. Thanks, Hernan.

Thank you, Roberto. We will now open the line for questions. Operator?

[Operator Instructions] Our first question comes from Ben Theurer of Barclays.

Two quick ones I had for you. So first of all, you've highlighted some of the sequential improvement in your prepared remarks, and particularly in the U.S. So as we're looking into the back half and thinking of just normal seasonality but still kind of like a protein market that it's somewhat stretched too thin, particularly on the beef side. Are you seeing any opportunities as it relates to kind of like some sort of share gains within your portfolio against other core proteins. And within that, what is your cost outlook from a raw material piece because you obviously highlighted the lower crisis, et cetera. So just as you look into the second half, what's your outlook volume and cost? And then I have a quick follow-up on Europe.

Ben, this is Roberto. Let me answer the question from the end to your question, and then I will move to the beginning. Starting with costs, yes, we are seeing a better dynamic in raw material particularly in the Turkey segment. As we reported in our earnings release, Turkey Thigh and Turkey Breast has increased significantly during the quarter, and we're seeing that new level of is at least to continue at that level, if not to continue a little bit lower. In the case of port, which is also a relevant component of our cost structure particularly in Europe, we're also seeing a better dynamic there given the ASF in Spain that is helping us to mitigate any impact there.

In the dairy segment, I will say, particularly some missed proteins and nonfat dry milk during the quarter was a little bit tighter in the market, hopefully by the second half of the year. We will see a better dynamics there. In regards to the sequential improvement, there is some seasonality, I will say, particularly in the second quarter in the U.S. because of the summer season and how volume trends higher in that segment. But for the second half of the year, we do expect that the year-on-year trends on volume for the U.S. to get better due to 2 things: first, a better comparable base, lower comparable base and the second 1 as well, new listings that we are getting into the main retailers in our categories.

And I will say, in adjusting categories or high potential opportunities for us in the U.S. like the case of cookies. In regards to market share, I will say that in most of our categories in the U.S. or in our biggest category in the U.S., which is hotels, we're pretty much in line with the industry. So our market share has remained solid there. in other categories where we see high potential opportunities as in the case of Hamanor or dinner Sasa, we are gaining some share in those categories, which is still a small portion of our sales, but where we want to continue growing in those segments.

And just as a complement, Ben, I would say that by the end of the quarter by June, we saw almost flat compared to last quarter. So we expect something similar in the third quarter, seeing almost flat in the U.S., and we see a positive comparison compared to fourth quarter compared to fourth quarter 2025 volume-wise.

Okay. Perfect. And then in Europe, you had again a quarter with higher fresh contribution, which kind of like brought your prices down, for how long should we expect this to last? Is that still something that's probably going to be a drag on pricing, just average pricing in the third quarter, just given what the dynamics are right now? Or how should we think about the pricing dynamics as it relates to the fresh business.

Sure. Thank you, Ben. I think the first business is important to think about price cost alignment. And at the end, price cost alignment volume and at the end, what is most important is if you see EBITDA per ton. So if you see, for example, this quarter and you see Total Europe, you do see a definite price. And again, that's coming from the cost dynamics in fresh meats, but at the end, when you see price cost and you see volume, you see EBITDA per ton positive 7%. So at the end, that is the number that we should be consistent with. And if price of raw materials go up or down. I think what is important is just to follow through on the EBITDA per ton.

Congrats on the results.

Our next question comes from Rodolfo Ramos of Bradesco.

Congrats on the great results. It was interesting to see the slide with the marketing campaign with Gaia, I mean would you say that there was a notable influence from the World Cup on volumes? Or in other words, should we expect the moderation or weakness in the second half? And also on revenue potential, can you talk a little bit about the drivers of sales growth in Mexico during the quarter, I mean, between pricing and mix, just to understand that very strong top line. That's the first question.

And the second 1 is it's a bit on the cost side. I mean you're getting clearly breathing room on some of your import costs. I mean does the news around the straight or moves or El Nino, I mean does that make you worry at all for the second half or maybe even next year?

Thank you, Rolf. Let me start with the first one, and I'll leave the second 1 for Roberto. The campaign is terseactually was pretty good. The food instead of food, and it was very viral. And at the end, I would say that we do have campaigns for the rest of the year. That was a good campaign, but we do have compen also for the rest of the year in the different geographies. It is important to support the brands all over the place. And we do see sales growth in all the regions for the rest of the year, low single-digit volume, but we do see positive in other geographies. And again, all of them sorted with some campaigns.

And as far as Mexico for this quarter, we do see -- depending on the cater, so we do see very good growth in dairy, especially if you think about it in volume in yogurt. We do see a lot of growth in jortsuch as rage, which has very nice contribution on that end. What we do see is that people are using some dairy products like yogurt for different occasions before it used to be for breakfast, for example, and now they use it between the day and some other things. So we do see a positive stable change for the feature.

We also see some positive trends on the proximity channel within Mexico and also in value brands. And if you think about the case of pricing and mix, it also depends a lot on raw materials. So we have been increasing prices, for example, in the case of Turkey in the last couple of months, years. And what we see forward, again, it's having a good price cost alignment, which then will allow us to have some volume growth, which is important, margins that comes from Prescott line, but at the end per ton. So if you think about what we think going forward, it's both balancing the volume for having revenues growth in the medium and long term. but at the same time with very nice EBITDA per tonne going forward.

If I can just complement a little bit on the question on volume regarding the workup. So we were expecting a little bit more volume coming from the food service sector. We didn't see that much as we expected. So we have a limited benefit from there. we saw and this were lower. The new lower expected international tourist particularly in Mexico or charter stays with if there were vacationing and and higher ticket prices that we think that affected the overall performance of the industry, however, as Rodrigo mentioned, a lot of the growth that we saw in Mexico during the quarter has to do with retail and has to do more with the dairy and category.

So that's a good part about the diversification that we have different levers that we can pull out in case someone performs lower than expected. Let me move to the cost side. Yes. I mean if you see there's a lot of volatility in the market, you just mentioned 2 different drivers of that -- we have seen some impact in our -- in some of our costs, particularly those related to freight in some regions in the U.S., in Mexico, we have seen some additional costs as well as some of the plastic packaging for our products. However, as we have said in the past, we do not see this impact as something that we cannot manage through our even revenue management initiatives or efficiencies that we're looking in the organization.

So there's still some headwinds, I will say, in the second half of the year. But as we mentioned in our initial remarks, we remain confident that the tailwinds, particularly in meat raw material is going to help us offset that headwind.

And just maybe 1 last one, if I may. Can you remind us your FX sensitivity?

Sure. For each of depreciation, the translation effects is around $30 million to $35 million of translation in EBITDA.

Wonderful. And congrats on the results. .

Our next question comes from Nicolas [indiscernible].

Rodrigo, better then -- and with first half compare EBITDA effectively halfway to EUR 1.1 billion target could you discuss which regions are tracking ahead of your original plan? And where you still see the greatest execution risk. This achieving guidance require meaningful U.S. recovery or can the other regions can offset this? My first question.

Thank you, Nicolas. Yes. So -- we are -- I will say, we're on track on all geographies in regards to what we expected in guidance. I know that the U.S. is performing a little bit softer than the rest of the region, but that was our initial assumption since the beginning of the year. We'll see -- we see better dynamics, particularly in Mexico that could potentially help a little bit more, but in general, all of the regions are tracking in line with what we expected since the beginning.

Okay. If I may, another, you highlight an improvement in new U.S. trends during June. And could what changing during this month, what's happening in June, please? There are 2 things, Nicolas. On 1 side, as Roberto mentioned, we had a comparison base. We -- last year, we lowered the little the inventories that we had through some promotions and taking away that, but June, as I said, was almost flat. But at the same time, rentals mentioned that we have had new listings in national retailers. Those new listings have been going through the months of the quarter. So by now, most of them are on and therefore, we expect those listings also to help us within the next months until the end of the year.

Our next question comes from Enrique of Morgan Stanley.

Thank you for I have 2 follow-ups here. The first 1 on Mexico top line growth, more specifically on pricing. You mentioned some price increases in some categories, some discounts in others and the idea that you have been conveying for a while of passing through the lower cost for consumers as well. But thinking about the prices for this quarter specifically, were there any mix effects or something like that impacted the the unit revenue growth, having in mind the deceleration? And considering the favorable costs on a sequential basis that you mentioned as well and considering that even with lower accelerating unit costs. You also grew margins a lot in Mexico. If you could also comment on how are you thinking about the magnitude of what to additional discounts going forward? And what are you expecting in terms of elasticity from the consumer or volume growth coming from that -- those discounts in the second half of the year? That would be very helpful.

And my second follow-up on the below-the-line dynamics. We noticed the higher net financial results that you mentioned in the initial remarks. I understand as well the higher FX results you mentioned, but just to make sure if there was any one-off effect or noncash effect that impacted that line during the quarter? And how should we think about that normalized behavior going forward? Those are my true follow-ups.

Thank you, Enrique, this is Roberto. Let me go first to your second question, the net financial cost. If you see almost 90% of the change has to do with lower FX gains in second Q 2016. And that has to do with the appreciation of the Mexican peso. In the second Q2 '25, the Mexican peso appreciated around CHF 143 while in the second quarter of 26, the peso appreciated around $0.60. So in the second quarter of 2016, we have a lower acquisition of the Mexican peso. Our U.S.-denominated debt is translated into a lower peso figure as the peso appreciates and this is reflected in the net financial cost as an FX gain. So most of the fact, again, has to do with the -- in the net financial cost, it has to do with that effect.

And the remaining 10% has to do with higher interest expense coming from a large proportion of peso-denominated debt as in this year, we moved a little bit more of our debt into Mexican peso to be more in line with our EBITDA generation.

Let me move now to your first question regarding Mexico top line and additional volume dynamics. Let me just say that we Broderwas mentioning that in previous years, due to the inflation of Turkey, we have increased prices. Actually, this quarter, prices, if you compare it to last year, in currency neutral are around 1% higher, and that has to do a little with mix because we're seeing higher volume in yogurt, and yogurt in general has lower prices than process meat and cheese.

If you see how we're doing with how we're managing margin going forward, we -- as we have said in the past, we are very conscious of trying to incentivize volume. So we will try to manage our revenue management initiatives in order to also capture a good margin, but also being able to incentivize volume in the long term.

And Enrique, I think that the last thing that Roberto said, it's very important, and it's a good way of thinking about it, how we think about it is just how to make sure that we can have sustainable volume growth for the long term. but balanced with a good EBITDA per ton. So at the end, those are most of the check balances that we do very often in other geographies for the present and for the future.

Our next question comes from Felipe Ucros of Scotiabank.

Pretty well there on Quick question on SG&A. As a percentage of sales, SG&A has been running a little bit hotter than historically. And I asked about that last quarter. It's mostly been coming on the sales and distribution front. And you explained that a lot of that has to do with product mix. Just wondering if there are other things in play there, not sure if perhaps you shifted the timing of your marketing spend because of the World Cup or if there's any shift across regions that is probably making regions with higher SG&A profiles take a bigger chunk of the participation. Any color that you can give us on what things are moving there. And perhaps more importantly, what do you expect for the coming quarters and for the long run, given that, that has been such a stable number for 5 years, and it's been rising quite fast.

And then the second 1 on M&A. The Roger Wood Foods acquisition. Just wondering about the rationale behind this one. Clearly, it plays in a space where you're already present and it complements the portfolio. But it also called my attention that it's a local brand. So just wondering if this is something you're planning to bring to the national level. And also, if you can discuss any footprint deficiencies that you can have because obviously, you're going to have a plant in a new location in the U.S. I'm just wondering if that's going to have any efficiencies as you probably profile your production.

Thank you, Felipe. This is Roberto. Let me answer the first 1 related expenses. If you see expenses expenses grew how they grew over the quarter versus last year. Around 1/3 of the effect has to do with the appreciation of the Mexican peso. So if you see currency neutral, you still see a growth, but a lower one. Then a lot of that has to do with payroll increase to inflation. There are some additional freight cost, as I explained, not only are we seeing a higher freight cost to fuel, but also availability, truckers availability and in general, other dynamics in the freight industry that are impacting costs. And also, we said as we move more over volume is usually a little bit less efficient than process meats. So that also increased a little bit more right, and marketing, as Rod mentioned, we have been investing a little bit more on marketing as we're trying to incentivize volume and capture more market share. So that has also increase a little bit the expenses.

And Philippe, is the wider wood side. First, we had our first 2 months, and we're very happy with the results we have had, and it's important to talk about sausages. We do see a good opportunity as such in the U.S., we see it as a high potential opportunity. It's a market or the margins are healthy. And at the same time, you do have some regional players in the different Georges within the U.S. And finally, we do see some opportunities of products and innovation within the whole market. So the way we think about it is organically, we're going to continue delivering new innovation for now.

For example, we have one called the sausage project. It's a chicken-based sausage. It's kind of a supplement or instead of Rotischicken that can be used for everything. And things like that, we do see continue launching within the U.S. And at the same time, as I mentioned, there's a lot of strong regional players that we think that inorganically, we can pursue all of them, just like Los Antes, we didn't chase or like Royer woods that we just did. These are bolt-on acquisitions that might happen.

But once you get a couple of them then, then you can start looking at footprint. We don't see an opportunity in the short term in the footprint on the opposite, we're going to use some of the available space that we had the plan to produce some of our sources that we're launching organically. But we do see that there might be some other bolt-on acquisitions that would happen in the U.S., and we then consolidate a couple of strong local regional players with amazing products, and with that, to be able to consolidate and to grow in the sausage category in the U.S. I would like to complement, Felipe, that Royal Wood foods is very synergistic. In terms of cost synergies, SG&A synergies, and we do expect to increase the margin in that business going forward.

Okay. Understood. And if I could do a follow-up on buybacks. It looks like you started making some purchases in the open market, but it was still very small. So wondering if there are any plans that you can discuss about getting more aggressive on this side in the coming quarters, given that valuation has come down a little bit in the last few months. Or this is more or less a pace maintained.

Yes. Thank you, Filipe. Talking about share buybacks. They represent an additional mechanism for the company to return value to shareholders, complementing the primary channel of capital returns, which for us is cash dividends. And as you mentioned, the business has delivered a strong start of 2026, and we maintain positive momentum through the rest of the year. But at the same time, like you mentioned, the share price has declined as the start of the rent conflict. And we believe this temperate disconnect between the performance of the business and the market valuation does create an opportunity, an attractive opportunity to repurchase shares at players that are in the best interest of the shareholders.

Having said that, we would love to allocate maybe a little more capital to share repurchases on the current circumstances. But at the same time, we also recognize that the net leverage ratio remains slightly above the long-term timing that we want of 2.5x. So this is why we have been executing buybacks selectively and opportunistically and at the same time, having a commitment to a strong balance sheet. So you might see something within the similar levels for the next year -- for the rest of the year.

Our next question comes from Alejandro Fu o.

Congratulations on the results. I only have 2 quick ones. The first one, maybe in Mexico in terms of competition. wanted to see maybe, Rodrigo, if you could elaborate a little bit more what are you seeing currently for your main categories in terms of competition? And also how do the market react when we see, let's say, improved cost environment for many of your categories. Do you see a little more maybe aggressiveness in terms of pricing for some of the competitors? Or is this very, I would say, rational competition going forward? That will be the first one.

And then the second one, also on M&A and I appreciate all of the color that you just gave, but wanted to know should we expect more M&A going forward? And if so, which countries and sectors would be you more interesting in looking at.

Thank you, Leandro. Let me start the second question, talking about M&A. The strategy that we have, which is going the court finding new earnings of growth and enabling the company to do those. At the end, we want to produce sustainable growth for the company even without the money. And that's very important that that's what we work on a daily basis. Having said that, we always have conversations in different geographies. And when we look at M&A, it's a couple of things. One is the amount of value that you can bring to the company. Most of these companies usually just like Los Altos or just like Royer woods are companies that were started by the founder and the founder doesn't have a second generation to pass 2 or something similar. And those are the opportunities that we see that add a lot of value to the company.

Those are the opportunities that with the knowledge that we have in the market with the knowledge that we have in formulation with the scale that we have for buying some raw materials with the structure that we have on both on the central side but at the same time on sales, bring a lot of synergies. So we don't have anything huge in any of the geographies. We don't foresee anything closing in the short term. But we do have open conversations within the geographies of this type of bolt-on acquisitions that could happen in the future that depend a lot on timing and depend a lot if the owner is at the time on selling the business or not. But we do see proactively, again, small acquisitions within the different geographies that when they come, we expect them to bring a lot of synergies 1 by one.

Let me talk about your first question regarding Mexico and competition. I will say, it depends a lot on the category. We usually -- the -- we have usually the leading position in the category. So whenever there is some cost fluctuation volatility, there's usually is us trying to be the price setters and that has remained during this volatile time. I will say, in Jabu, particularly, and we have discussed that, we're gaining organic presence. We are particularly in those categories, subcategories of yogurt are growing mostly Greek, as Rogerio mentioned, and other functional yogurts. We see that as a very good dynamics. And we have seen, in general, very rational and good competition in most of the categories.

Our next question comes from Fernand Olvera of Bank of America.

Perfect. I have a quick follow-up. Regarding cost, I would like to hear your thoughts if you see any risk on mid cost given the increase of grain prices.

And my second question is related to the U.S. If you can give us some color about the volume performance of national and Hispanic brands? And what is your outlook for coming quarter.

Okay. Fernando, this is Roberto. Let me talk about costs. So I mean, as I mentioned previously, there's a lot of dynamics and volatility, particularly in raw materials, we're seeing now a friendly environment. But definitely, there is a possibility for higher additional cost in the future. But -- I mean, due to 2 grains and all everything regarding what is happening in the Middle East. Let me just say that, usually, there's a lot of dynamics or levers that move the price of propane. Some of them definitely are the input cost, the grains, et cetera. But what we have seen recently more particularly in propane, is that external effects such as -- or not external, the other effects such as diseases like what is happening with ASF in Spain or what happened with pain influence in the U.S. at the beginning of last year or or those type of things are the ones that move the prices at least in what we have seen recently in the recent history.

More than higher input cost. Having said that, there's obviously a risk and that depends on how deep or how long the conflict remains in that region as we have done in the past, and we have proven. If that happens, we will try to protect margin by have some revenue management initiatives and being very cautious about not affecting the consumer in the long term.

In regard to U.S. volume outlook, let me talk about -- we continue to see some growth in Hispanic brands particularly as we are growing into some existing clients, we're also getting some new customers as we have mentioned in the past, we're getting more of our Hispanic brands portfolio into mainstream channels as Hispanic has become more mainstream in the U.S. And in regards to national brands, as Rodrigo mentioned earlier, we saw a better dynamics in June that we saw at the beginning of the quarter. And we do expect that the ten-year trends, some volume get better in the second half of the year?

Our next question comes from Froylan Mendez of JPMorgan.

Excellent. Thank you so much for the space. Regarding free cash flow, in the first half, cash generation and deleveraging looked somewhat muted if you compare it with the EBITDA generation. Can you guide us through what specifically needs to happen in the second half to improve the free cash flow generation and the leverage reduction?

And my second question is more on Europe, into the second half, what is the right margin cadence that we should expect given the new capacity ramp up? And maybe what is left from insurance recovery, et cetera.

Let me talk about free cash flow first. Usually, so in the first half of the year, we should invest a little bit more on net working capital. If you see because we're building some inventory in both raw materials and products for the summer. The second half of the year usually has lower lower investment in net working capital. In regards to CapEx, we do expect to continue investing in to be very close to our guided number of CapEx investment in CapEx of around $460 million that just for everyone benefit, remember that we are investing around $100 million more this year because of the rent the UPL plan, the torrent recovery capacity that we're investing in Spain, that most of that investment was paid by the insurance last year. So if you see -- we do not -- if you see the second half of the year, we do not -- or we do not expect net debt to change that much of what the figure that we reported in this quarter, but we do expect a higher last 12 months EBITDA of EUR 1.1 billion, which will lower the net leverage ratio closer to our long-term target. In regards to Europe, there's a lot of seasonality in European EBITDA in the second half of the year and particularly the fourth quarter, significantly higher than the rest of the year. We do expect to continue with the seasonality during this year.

In regards to the insurance recovery we are reflecting the payments that we received from time to time in each month of the part of the business continuity of the business interruption part of the insurance. So there's no no change in there. And we do expect the seasonality to be in line with the previous one. And at the end, we were seeing Europe very in line with what we expected since the beginning of the year in terms of guidance, which represent a significant increase versus last year.

And further, the only thing I would add is that we do see bits interruption until we have the facility back on track. What are those the type of things that come in business interruption. Well, we're producing, for example, some of the hot dogs in Portugal, and it has an extra cost to taken from Portugal, back to Spain. And those are the type of things that the insurance pay. And again, we see that until we have the facility back on track. And as Roberto mentioned, the second part of the year, it's a lot stronger seasonality in Europe, we do expect to see double-digit growth on the whole year in the European part.

And Froylan could follow up just on the update on the sale of Grupo Bal, where are we -- when do you expect this to happen?

So now it's under the commission -- Spanish commission of Competition. And we do expect to have it on the third quarter will happen in the third quarter.

Our next question comes from HindenBarelo of PGIM.

A quick one for me. Regarding the U.S. side, can you just tell me what happened? Remind me on the reason for the weakness on a year-over-year basis in organic terms?

Thank you, Hendi. So yes, I think it has to do mainly with last year during the second quarter of. I would say, on top of the softer consumer environment that we're seeing in the U.S., last year, we have a higher comparable base because we did some inventory optimization sale in the second quarter of 2025, we reduced our inventory days, our finished product inventory days, and that reflected the higher comparison base. If we remove that effect out of the numbers, again, as we have mentioned, of June, we saw an improvement. A significant improvement in volume results.

And I will say June is almost flat versus last year in terms of volume. And again, with we're seeing in terms of listings, particularly in the national brands business, we do expect that the second half of the year to be better.

And just in, this is the way we thought about it from the beginning of the year. So even though it's a little bit low last year, it's on track on what we're expecting. And as Roberto mentioned, we we do see both volume growth and EBITDA growth on the U.S. compared to last year on the second half of the year.

Great. And just to quickly follow up on that. You mentioned more kind of promotions last year. But when I'm looking at margins, it looks like there was actually a slight compression compared to last year. Am I seeing that right?

In terms of -- there's a margin, there's some mix effect, I would say, particularly in the Hispanic brands business. That has to do with 2 things. First, I would say, lower sales of Hispanic product in independent retail stores versus versus big chains in the U.S. as well as, I would say, a little bit lower margin in the dairy category in the U.S. just because milk is a little bit higher than last year.

And on a similar basis, if you see the rest of the year compared to 26% compared to 25 in the second half, you might see an EBITDA per tonne on the second half precore on the U.S.

There being no further questions. I would like to return the call to management. Let me turn the call back to Rodrigo for closing comments.

Thank you, and we're pleased with the positive momentum we have built through the first half of the year, strong operating execution, disciplined capital allocation and a healthy balance sheet position us well to continue delivering consistent results. We greatly appreciate the continued support of our investors and business partners. We look forward to updating you next quarter.

Thank you all for your interest in Sigma Foods. This concludes today's conference call.

Good morning, and welcome to the Sigma Foods First Quarter 2026 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 later today. I will now turn the call over to Hernan Lozano, Sigma Foods IRO.

Thank you, operator, and good morning to everyone joining us today. Further details regarding our first quarter results can be found in our press release and earnings presentation that were distributed yesterday. Both documents are available in the Investor Relations section of our website. Before we begin, please note that today's discussion will include forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results may differ materially. Sigma Foods undertakes no obligation to update these statements.

It is my pleasure to participate in today's call together with Rodrigo Fernandez, Chief Executive Officer; and Roberto Olivares, Chief Financial Officer. Our agenda today is straightforward. Rodrigo will begin with a strategic and operational overview of the quarter. Roberto will then review our financial performance in more detail, and we will conclude with a Q&A session.

With that, I'll turn the call over to Rodrigo.

Thank you, Hernan, and good morning, everyone.

2026 started on a strong note with record first quarter volume and revenues as well as the second highest comparable EBITDA for the period. Results were supported by disciplined execution, early signs of improvement in certain raw materials and stronger currencies benefiting our operations outside the U.S.

Sigma operates from a position of financial strength. Our investment-grade balance sheet has no material debt obligations over the next 2 years as we proactively refinance those maturities through a successful issuance of the local notes during the first quarter. From a capital allocation perspective, we recently held our first Annual Ordinary Shareholders Meeting at Sigma Foods, where shareholders approved total cash dividends of $150 million for 2026.

This reflects our strong cash generation, which supports our balanced approach to drive growth while returning capital to our stockholders. Disciplined investment in high-return strategic projects is fundamental to continue growing our core.

Let me highlight several key developments on this front. In Mexico, we continue expanding yogurt capacity to meet strong demand. Our yogurt team has done an outstanding job recently climbing to the #1 position of this product category nationwide.

In the United States, we're advancing the expansion of our cheese operations in California, supporting the continued growth of our Hispanic brands as they gain traction in mainstream channels. In Europe, we're encouraged by the steady improvement in profitability and the progress of our capacity recovery in Spain. The expansion of La Bureba facility is almost complete and our new packaged meats plant in Valencia is on track to start operations in 2027.

Both projects are key to restoring lost capacity and further strengthening our competitive position through efficiencies. Turning briefly to the global macro environment. Conditions remain fluid given the broad effects of the ongoing conflict in Iran. The recent spike in oil prices increases uncertainty and pressure for consumers across many markets. We are actively managing to mitigate short-term headwinds related to energy, plastic packaging and transportation, among others.

At the same time, we're encouraged by positive external developments around meat, raw material cost and foreign exchange trends. Combined with the diversification and scale of our operations, these factors provide flexibility as well as we navigate the current environment. Overall, the balance of external headwinds and tailwinds remain supportive of our 2026 guidance, which remains unchanged.

With that, I will now turn the call over to Roberto for a more detailed review of our first quarter financial results.

Thank you, Rodrigo, and good morning, everyone.

Our consolidated results reflect solid execution, complemented by a favorable currency translation effect. Total revenues increased 13% year-on-year.

Supported by volume growth and higher average prices in Mexico, Europe and Latin America. Similarly, comparable EBITDA increased 18% year-on-year, driven by robust growth in Mexico, Europe and LatAm.

Regarding performance by region. Mexico was a standout once again this quarter, delivering record first quarter volume, revenues and EBITDA. Growth was mainly driven by strong results in the dairy category across all channels as well as solid packaged meat performance in proximity retail channels.

By brand segment, our value-oriented brands continued to grow at a higher pace than the rest of the portfolio. Europe delivered solid progress with volume increasing 4%, supported by double-digit growth in the fresh meat business, which benefited from temporarily lower live hog prices in Spain.

EBITDA was $25 million, marking Sigma Europe's highest first quarter figure since 2021. Regarding the Torrente plant floating insurance, let me remind you that we received 2 types of reimbursements, property damage and business interruption. During first Q '26, we received reimbursements exclusively related to business interruption, which replicate the plant's operation and therefore, are considered part of our operating results.

Only property damage reimbursements are considered extraordinary items for purposes of comparable EBITDA. For the avoidance of doubt, we did not receive any property damage reimbursements in first Q '26. On the strategic front, we continue advancing to obtain regulatory approval for the previously announced fresh meat transaction in Spain as soon as possible.

In the United States, the consumer environment remains softer relative to other regions. Yet continued progress in Hispanic brands across mainstream channels helped offset lower demand in national brands. Sequential improvements in volume, revenues and EBITDA were in line with expectations as pricing actions continue to better align with cost. We expect this trend to accelerate in the second quarter as seasonal effect kicks in.

Latin America continued its positive trend recovery trend, delivering year-over-year growth in volume, revenues and EBITDA, supported by ongoing operational initiatives and improved execution. Turning to the balance sheet. We continued strengthening our debt profile during the first quarter, successfully issuing approximately $580 million in local notes and extending our average tenure to 8 years by refinancing short-term term maturities.

These notes received the highest local credit ratings from Fitch and Moody's and attractive demand of roughly 3x the initial target.

We benefit from a diversified financial structure that provides flexibility to meet our funding needs across different currencies, maturities and credit instruments. Net debt totaled $2.8 billion at the close of the first quarter, up $127 million year-to-date. The increase was mainly driven by higher net working capital, reflecting supplier payments related to year-end CapEx projects and seasonal inventory investments.

Importantly, net working capital investments was 18% lower compared with the first quarter of 2025. Regarding leverage, our net debt-to-EBITDA ratio ended the quarter slightly above our long-term target of 2.5x, reflecting the previously discussed working capital dynamics.

This concludes our prepared remarks. I will now turn the call back to Hernan for Q&A. Hernan?

Thank you, Roberto. [Operator Instructions] We will now open the line for questions. Operator, please.

[Operator Instructions] Our first question comes from Fernando Olvera of Bank of America.

Keeping this to one question, I want to ask you, I mean, based on the volatility of whole prices that you highlight in the initial remarks, can you give us some color of the potential impact that this could have on margins and how relevant are from your cost structure, the freight cost?

Fernando, this is Roberto. Thank you for your question. Regarding the Iran conflict and the potential and the impact that it has on the market, the potential effect will depend on the conflict duration. Yes, we have some exposure to -- in some categories, particularly in the packaging category. So we have some plastic packaging. We have the freight costs as well as some utilities.

In regards to utilities, particularly in Europe, where we are seeing that the markets are -- have more volatility, we're mostly hedged for the year. We have around 80% of the utilities hedged in Europe. And in regards of the other categories, the impact so how that we have seen has been manageable through other efficiencies and initiatives within the company.

Let me just put this into relative context. We are seeing as well favorable raw material dynamics, particularly in the Turkey segment as well as fresh field. And also the FX has continued to help during this year.

So we do not expect any material impact coming from the conflict. And as we mentioned, we remain confident to reach our guidance for the year.

Our next question comes from Enrique Maguero of Morgan Stanley.

My question will be on Mexico EBITDA margins. We were a bit surprised to see a margin decline in Mexico this quarter, given the current Mexican peso level and the raw material benefits you just mentioned as well.

So on that matter, if you could just dive a little bit deeper on the drivers behind this margin decline in Mexico. It would be very helpful. So for instance, if you saw any tailwinds from the stronger Mexico peso this quarter, if you should -- maybe if we should see that only later on, any relevant raw material or SG&A components this quarter as well?

And still on Mexico margin, if you could comment on how you're seeing the latest developments on raw materials? And how does that affect your initial expectations on Mexico profitability for the year as well would be very helpful.

Let me start and then Roberto can complement. We see Mexico very strong. And something important to mention is that dairy has been growing at a higher pace and the margins between dairy and packaged meats, both are very positive, but there is a mixed part on that. And if you want to complement, Roberto?

Yes, sure. And not only will be a mix in categories, but also in brands, we have been seeing value brands growing a little bit more than premium and mainstream brands. So that will also have an effect on mix.

On the part of raw materials, as we have mentioned, we have seen particularly since the start of the year, Turkey bad decreasing sooner than we expected. And positively, we've recently seen Turkey ties start to move. In the last couple of years, the market of Turkey tie has decreased so far MXN 0.02, but it's signaling that we do expect the Turkey market to decrease in the coming months. That will -- particularly Turkey will potentially have a benefit in COGS.

We, as always, will take a more balanced approach in terms of margin and volume. We want to incentivize volume. So particularly this year, as we're seeing the consumer a little bit softer than in previous years.

So we will take a balanced approach to see how much of that potential improvement in COGS will be go up down to the margin.

Let me just give a quick clarification about the tie price increase. This is a very recent development over the last couple of days.

Correct.

Our next question comes from Froylán Méndez Solther of JPMorgan.

Is there anything that makes the first quarter in terms of margins and cash generation seasonally weaker versus the rest of the year? Because my question comes because if we extrapolate the margin performance seen in the first quarter, it would be hard to think that guidance is achievable.

And my second question, if I may, you mentioned improved penetration of Hispanic cheese in the mainstream channels. Should this be margin accretive? Are you able to price Hispanic products in the mainstream channel as, let's say, more premium product that should command a higher margin?

Let me just very briefly start that we do see a good start of the year. And as Roberto mentioned, we're actively managing to mitigate impacts from the conflict, so that shouldn't be a problem. We do see lower raw materials cost going forward.

We do see favorable FX trends within the geographies. We do see by the end of the quarter, positive strength within each one of the geographies. So with that, we feel comfortable with the 2026 guidance.

And I will only complement for that there's usually a seasonality effect in terms of EBITDA generation, particularly coming from the U.S. and Europe during the second quarter is a stronger quarter for the U.S. And as the year advances, Europe generates more -- generally more EBITDA.

In particular in the fourth quarter, it's a very strong quarter for Europe. So yes, there is a seasonal effect on EBITDA. As we have mentioned, the $260 million that we delivered during first Q is in line with what we expected for the first Q and what we are seeing, as Rodrigo mentioned, will be to very align or aligned with our guidance.

In terms of -- you also mentioned cash generation, there's usually more investment in net working capital during the first quarter that has to do with either CapEx payments of projects that were approved in the fourth quarter of last year and seasonal investment in inventories that we do expect that investment in net working capital to normalize a little bit through the year.

And regarding Hispanic...

I would say that the margins are -- I don't think that you will see a change in the mix by Hispanic [ press ] or Hispanic cheese compared to packaged meats. At the same time, I would say that as of today, we have a very good position on the unitary margin on packaged meats in the U.S. in anticipation of the seasonal demand, including the bulk of this year. So we feel very comfortable with the margins going forward.

Our next question comes from Ulin Sarawate from Santander.

I think it's -- you partially mentioned this in the previous question, but I wanted to get maybe some more thoughts there on the working capital dynamics, maybe understand a bit more where these investments and where this pressure that we saw in the quarter was coming from. And just to understand also going forward, Roberto, you alluded obviously to some seasonal effects there as well, the first quarter being a bit more heavy or loaded there on the investments on working capital.

So just to understand if this is something specific to this year and how you're thinking about it? Or is this kind of the run rate that we should think about for the following years kind of model-wise?

I'll let Roberto talk about seasonality, but let me start just commenting on the part of inventory within working capital. We found a couple of good opportunities to secure some Turkey and some beef for both the retail on the side of Turkey and for be for the food service during last year.

So we have more inventories at the beginning of the year. That will translate -- definitely, we're in a better position, but that would translate that during the year, we might be buying a little less on that, especially more on the Turkey's more breast more than the Turkey type.

So again, that will allow -- that leaves us today with a little more inventory, but with good prices. And during the year, we should buy a little less of that. And by the middle of the year, end of the year, we should be lining [ gap ]

And just to complement, Rodrigo, Luis, in general, the working capital has a seasonality effect. Usually, it is similar to what Rodrigo mentioned during the first quarter, we built up some inventory because usually prices of raw materials are higher in summer because of supply.

I'm talking specifically about, for example, pork, pork during summer usually is higher because of the weather and that makes the pigs to gain less weight and that implies less kilos of supply, et cetera. So you should see this dynamic usually through the year, and we will delever net working capital by the end of the year.

In terms of this particular investment for the first quarter, as Rodrigo mentioned, there's this investment in inventory as well as payments that we did regarding CapEx of projects that we approved at the end of last quarter.

And you will see that number to normalize through the year.

Thank you very much for your question. And I think we can move on to a question that we got from our chat from the webcast. And this is from Vanessa Quiroga asking about any changes in consumer behavior we have identified in the U.S. or Europe resulting from rising inflation recently.

Thank you, Vanessa. So in general, if you see -- I mean, I will talk about 2 different markets, the U.S. and Europe. Let me first approach the U.S. If you see the consumer sentiment in the U.S. is the softest that we've seen relative to other regions. And also within the U.S., I think it's record low in many, many years.

That has exacerbated with the gasoline prices recently increasing in the U.S. and all that dynamics. In terms of what we are seeing with our consumer stories, the U.S. consumer is taking more -- much more affordability approach to grocery shopping and that is -- I mean, moving the dynamics of the market, we have been following those dynamics and trying to change our strategy as the consumer changes.

I think we're well positioned with our brand portfolio to take over a lot of the consumption of our categories. if the consumer or as the consumer trade down within our categories. Our biggest brand in the U.S., Bar-S is positioned as a smart choice more on the mainstream to value segment of the consumers.

In regards of the U.S., I would say -- in regards of Europe, I'm sorry, I will say a little bit different particularly last year and through the beginning of this year, we have not seen as much inflation yet.

I mean, obviously, this conflict with Iran will and depending on the duration will potentially change that. But actually, branded volume growth has consistently grown in Europe, and that is a signal for us that consumers in Europe are not necessarily that focused on affordability and more focus on the value that they receive from the products. So we see different dynamics in both regions.

And just important to complement, if you see the categories where we participate, it's a great [indiscernible] quality at a very good price. So we should be in a good position within the categories where we participate in those geographies.

[Operator Instructions] We got a follow-up question of Fernando Olvera of Bank of America.

Sorry, I was muted. Can you hear me now? Yes, right?

Yes. Perfect Fernando.

Now I have just 2 quick ones. The first one is if you can explain the higher tax rate that we are seeing in this quarter? And what should we expect in the quarters ahead? And the other one is if you have any update regarding the Grupo GAL transaction in Europe.

Fernando. This is Roberto. Yes, regarding the tax rate, first, let me say that first Q tax rate is not representative of the annual tax rate as there is some volatility from quarter-to-quarter. Factors behind this volatility may include the FX and some other adjustments, particularly labor liabilities and others.

The income taxes are comprised of incurred taxes and deferred taxes. Let me first start with the incurred tax and the incurred tax of the operation reflects a lower rate, which is very aligned with the statutory rates. This quarter, we have a deferred tax effect that we recognize, and that is the one that is raising the implied rate to the figure.

And that deferred tax is related to a labor liability change that was the effect of the end of ALFA's transformation process.

And regarding the update on the fresh meat transaction with Grupo GAL, we are advancing. We actually are moving forward in the process of -- with the competition authorities. We were seeing the transaction to closes to soon.

It has taken a little bit more time, not because there has been anything related to the process, but just because of the time the transaction was reviewed by the competition authorities. We do expect to close hopefully during the second quarter of this year.

Okay. Great. Roberto, regarding what you mentioned about labor liability, I mean, is it something that we can see in coming quarters or it was just this quarter?

No, no. Thank you, Yes, it was a nonrecurring effect. So we do not expect that to see in the coming quarters. We do expect the tax rate to lower in the coming quarters -- the implied tax rate to lower in the coming quarters.

Our next question is a follow-up from Froylan Mendez Solther of JPMorgan.

Could you help us just frame how has the reaction of the consumer been so far in Mexico? I remember you saying that part of the benefits from raw materials would be translated into the consumer, probably being a little bit more promotional, more strategic given the health of the consumer.

But how would you frame the consumption environment and the reaction of the consumer in Mexico versus your original expectations?

First, let me say that -- I mean, if you see volume in Mexico is increasing around 2%, and that has more to do with the retail channels than the foodservice channel. And within retail, particularly dairy is increasing mid- to high single digits versus packaged goods.

In general, we're seeing good dynamics in most of our categories where continue improving the position of our brands with consumers. As Rodrigo mentioned in his initial remarks, for example, in the case of yogurt, we are now the #1 player in the yogurt category, and that has to do a lot with our portfolio and that consumers are preferring our brand and our products.

In regards to other dairy categories, cheese, particularly coming from value-added cheeses, slice and shredded cheese, and that has also helped us capture more clients. And in the case of packaged meats, particularly those segments that are more value segments and those regarding to specific needs.

For example, everything that is regarding grilling has increased a lot in Mexico recently. So we have take this careful approach of incentivizing volume, but also protecting margins as particularly as this very recent improvement in the tight market evolves, we do expect to continue looking into other ways to incentivize volume and also maintain margins.

And Froylan, I will just complement if you see the unitary EBITDA in Mexico, we have been able to maintain or even grow a little compared to last year. And we have done that with a lot of cost increments of raw materials.

So what we're thinking going forward is that balance between maintaining our unitary margins that are very important to make sure that the short-term results are there. But at the same time, the volume that will allow us to keep growing within the geographies.

And we do plan to maintain that balance between those 2. And hopefully, with that, we'll be able to keep giving good results in Mexico in the short, medium and long term.

Our next question comes from Felipe Ucros of Scotiabank.

Just a quick one on SG&A. Just wondering if there was any unusual seasonality for the quarter? Or do you expect any unusual seasonality throughout the year with your expenditure and marketing? And just wondering more or less what level of SG&A as a percentage of sales you guys are thinking about for the rest of the year?

Thank you, Felipe. This is Roberto. Yes, regarding SG&A, we don't necessarily see a lot of seasonality other than usually, S&A changes a little bit with sales mix. So whenever -- let me give you an example of Mexico.

So whenever there's changes even in the categories or the channel mix or even the region where in Mexico, there are some changes in SG&A as we're now selling a little bit more yogurt than relative to the other categories, particularly sales expenses are a little bit higher.

Even with that, yogurt margin has increased significantly in the last years due to a better mix coming from value-added products. But yes, there's some changes in SG&A regarding mix.

But seasonal effects not necessarily. So yes, Rodrigo.

And within marketing, Felipe, I would say that we have been -- we have a very strong position in all the markets we participate, but we still see that there might be opportunity to do things even better. We have been putting a lot of effort on the marketing side of the company.

We have a couple of good campaigns on the pipeline that should be coming out. In the long term, we definitely will be investing more money in marketing, but this is not something that is going to be radical. What we're seeing is pushing some new products that will be coming out of the market and gradually be spending more time on that, more money on that. So with that, the idea is to put some effort on campaigns that will also bring more volume and more margin and at the net of that should be positive.

But again, I don't think that it's going to be anything that will be outside of the [ gradually ] way of saying it. And with that, I don't think that you should see any spike or any change within market, even though as time goes by, we should be spending more on that side.

Okay. Great. So we should expect SG&A levels to be similar to the last 2, 3 quarters for the short term for the next couple of quarters?

Yes, correct.

There being no further questions, I would like to return the call to management.

Let me turn the call back to Rodrigo for a closing comment.

Thank you, Hernan. We're encouraged by the strong start of the year. These results underscore the resilience of our business model and a high-performing team. We remain focused on operational excellence to stay ahead of consumer needs and preferences in a dynamic environment. We greatly appreciate the continued support of our investors and business partners. We look forward to updating you next quarter.

Thank you all for your interest in Sigma Foods.

This concludes today's conference call. You may disconnect.