Sigma Foods (SIGMAF) Q3 2024 earnings summary

Executive summary

• ALFA transitioned to a single-business structure focused on Sigma after spinning off Alpek and previous divestitures, ending the conglomerate model and enabling independent valuation for each business.

• Shareholders and bondholders overwhelmingly supported the transformation, including a $400 million capital increase (Ps $7,952 million), oversubscribed and expected to reduce debt.

• Sigma achieved its 14th consecutive quarter of year-on-year sales growth, with record consolidated EBITDA and volume, driven by strong demand and operational excellence across all regions.

• Alpek reported its highest quarterly comparable EBITDA since 2022, prompting a 13% increase in full-year EBITDA guidance to $675 million.

• Shareholders approved the Alpek spin-off, with shares to be distributed via Controladora Alpek and completion expected in 2025.

Financial highlights

• Sigma delivered all-time high sales and volume in the U.S. and Latin America, with significant margin expansion and record volume and EBITDA in Mexico for three consecutive quarters.

• Sigma posted all-time high quarterly EBITDA of US $281 million in 3Q24, with growth across all regions.

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

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

• Sigma's net leverage ratio improved to 1.7x, the lowest in 16 years.

Outlook and guidance

• Sigma estimates a further $50 million upside on its 2024 EBITDA guidance, reflecting better-than-expected progress.

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

• Combined entity leverage is expected to approach 2.5x by year-end after debt repayment, aligning with the company’s target.

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