Earnings Call: Q1 2019

Apr 24, 2019

Quarterly report

Good morning, and welcome to Grupo Rotoplast First Quarter 2019 Results Conference Call. Please note that today's call is being recorded and all participants are currently in a listen only mode to prevent background noise. The host will open the floor for questions later. Today's discussion contains forward looking statements. These statements are based on the environment as we currently see it and as such maybe certain risks and uncertainties associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It could be found in the Investors section of its website. Also, the presentation for the call and the webcast link are in the Investors section. Today's call will be hosted by Mr. Carlo Rojas, RotoPlas' Executive Chairman of the Board and Mr. Mario Romero, Chief Financial Officer. I will now turn the call over to Mr. Carlo Rojas. Please go ahead. Thank you all for joining us today. It's always a pleasure to be able to speak to you. But today is a particularly exclusive day to do so. Us. As I have an important announcement to make about Reficio and Aerotemba. First, I would like to discuss a couple of key aspects in the U. S. As we mentioned in the report, we continue to grow up in spite of changing we continue to take advantage of the various synergies to fill our and I would like to announce the next phase of the company's renewal. As far as our team, our Board of Directors yesterday, to lead to our CEO. As we already mentioned, our strategies have proven down and we will continue to execute in. Preserving the leadership position of our business. And most importantly, we will continue to assist to the highest PSD standard, not only continuing our growth, but also creating value for our stakeholders in our community. Thank you for participating in this call. I look forward to your questions and I hope you will be able to join us at our Agua event, which will take place in May 6 at 5:30 pm in our headquarters in Mexico. It would be a great opportunity for you, Jason. In the meantime, I would like to turn over the call to Mario for more interest this person of our extraordinary results and not available. Thank you. Driven by the integration of the new acquisition in percent. Likewise, we paid 3% in 2019 to $60,000,000 net reaching more than 10,000 feet per container to 53 already We will continue to find user use for agembe oil and expand our Yara Securities section. These are claims our effective length in our will continue to give the balance and capital expenditures for our wireless fleet. For 2019, from GBM. Hello, good morning. Thank you for the call. Congratulations on the results. I have two questions for you. The first one is regarding the integrated sales portfolio. We're wondering if you have if you could give us more color on the situation you're seeing regards to security or like the clarity in regards to regulations or political stability in terms of your demand growth for the water fountain services or other government related services? The second question is regarding Kitsapar. We were wondering if for 2019, we where should we track the growth in terms of design sorry, the build, operate and transfer and stream or the maintenance team? Thank you very much. Hi, Rodrigo, and thanks for joining the conference. Regarding your first question, the 2 components imply the sales of the sales 3rd one is the water pumpings. In the case, we did not repair I'm sorry, but I think the line is cutting. I couldn't quite hear that. Can you hear me better? Yes. That's right. Thank you. I'm terribly sorry to interrupt. But the thing is that the line is coming again. I lost I lose connection like when you start speaking. I don't know. I will change the mic. Thank you. Thank you. Okay. Going back, well, There's 2 components for the decrease in sales as well as the Phase 1 is The yellow contract was closed. We were executing some contracts we have in the past, and we were investing in viewpoint of the service. Its impact. Actually, we are seeing more flash increase. The only thing is that new clients are coming in with different processes, especially with newer and more sophisticated right people being developed. The longer term are taking for the company to start booking that revenue in the cycle. But to complement Mario's response, I wanted to mention that in the wastewater treatment plant season, the synergies between TUKATA and Yotapat have proven to be very valuable for our customers and the response has been tremendous. It is a business model that's very different from our traditional business model and thus takes longer for results to show up in the EBITDA numbers. But I hope you already answered, clarified your questions. Yes, Rodrigo, can you hear us? Good. It seems that the participant has disconnected at this time. We will now move on to the next question. It comes from Jose Cebreira from Argentina. Please go ahead. Hi Carlos and Mario. Just two quick questions. During the Q1, you faced more than a challenging environment in Mexico due to uncertainties in the economy and the delay in some payments. But I just want to know that during April, have you seen any recovery, I mean, Mexico or do you expect stronger figures during the second half of the year? And second question, if I may, is regarding the IFRS 16 and this effect. I just want to know if you can share with us a little bit more comparable figures, I mean, the amount of EBITDA without the IFRS 16 or the EBITDA margin? Thank you. Hello? Ladies and gentlemen, please standby as we're experiencing a temporary interruption in today's conference. Thank you for your patience and please remain on the line. Please go ahead. Hi, Carlos and Mario. Yes. Can you hear us okay? Yes. I have two questions. The first one is regarding Mexico. I know that during the Q1, you faced more than a challenging environment and some delays in the payment. But I just want to, Halley, give more color about the performance in April or if you think that the figures for the domestic operation are going to improve during the second half of the year? And second question is regarding the IFRS 16 effect. Could you give us a little bit more details about what should be the EBITDA without this effect? Regarding your second question, the company impacted our assets I'm really sorry, but I can't understand what have you said. I believe that there are some huge problems in the mix. So I'm really sorry, but I can't understand what you have said. Jose, can you hear me now? Yes, yes, I can hear you. So we're going to try to go connect the line. I'm going to try to answer Ladies and gentlemen, please stand by. We're experiencing a temporary interruption in today's conference. Thank you for your patience and please remain on the line. Please go ahead. [SPEAKER RODRIGO GUZMAN PERERA:] Jose, can you hear me now? [SPEAKER RODRIGO GUZMAN PERERA:] Yes, yes, loud and clear. [SPEAKER DANIEL MARTINEZ VALLE:] Thank you very much for your patience. We have a terrible problem with the mic. But now we are we're in better shape now. So regarding your two questions, I'm going to start with the IFRS. The EBITDA report is going to be the same because the company adopted IFRS 16 since January 2018. So there's no changes there. And then with regards to Mexico, as we mentioned through our conference, we are seeing a more challenging environment going forward. Therefore, we are being more conservative in our capital expenditures as well as starting to implement some cost cutting initiatives across the company. It's also worth to mention that we have some tailwind coming from lower resin prices. As you might know, new polyethylene capacity is coming to the market and that is helping us in the cost of raw materials, which translate into an offset to the declining or more conservative revenues growth for Mexico. Okay. Thank you very much. And again, sorry for this technical improvement, but we always got Mike's problem. Okay. Don't worry. Thank you very much for the answer. There are no further questions over the phone at this time. I would like to hand it back over to the speakers. We have a couple of questions posted on the website. Maria, do you want to read that? Sure. We have a question from Liliana De Leon from GBM. Could you please give us more detail on Ziteso's growth and profitability for the year? [SPEAKER RODRIGO GUZMAN PERERA:] Hi, Liliana. Thanks for joining us. With regards to Zitesa, as we explained before, the pipeline and the booked water treatment plant is going according to plan. Our plan for the year is intact in terms of our target of revenue and profitability. As explained before, we have experienced some delays on the beginning of invoicing the service, given that there are more complex water treatment plants being built as well as a new set of clients that their processes are different to what we were used to. We expect to continue increasing the pipeline and the bookings for the remainder of the year and invoicing should be resolved during the Q2 of this year. We have another question from Liliana de Leon. How volume in Mexico are performing in April? The slowdown in Mexico is something that could make you more cautious regarding growth in profitability going forward? Anthony, again, again after this question, as explained to Jose, obviously, the environment as wheel sensing is being more challenging. I think the good part to it is that raw material prices are going down and that is helping out the profitability of the company for 2019. We are very focused on executing well our plan and hope to have a good year in Mexico despite of the economic situation we are all facing. We have no further questions on the website. Could you please open the line again, Christian, for questions? Of course. There are no questions in the phone queue at this time. There are no further questions in the phone queue at this time. Thank you, Christian. Well, thank you very much for your time, patience and your interest. We hope you will join us again next quarter. Until then, we'll be sure to provide you with important updates. This will conclude today's conference. Thank you all for your participation. You may now disconnect.