Earnings Call: Q1 2021

Apr 22, 2021

Quarterly report

I would now like to turn the call over to your host, Mr. Raul Kavazos, Grouma's Chief Financial Officer. Please go ahead, sir. Thank you, Melissa. Good morning, and welcome to our Q1 2020 1 conference call. We thank you again for giving us the opportunity to share our results with you, which highlight the changing market dynamics. In terms of our business at Gruma, we are pleased to see that Gruma Products as a retail channel have retained have remained strongly rooted within Bruma's traditional client base as well as we think that a growing demand for our entire product line, especially in the U. S. The enhancement of growth at our Supersoft and more particularly at our CapBalance segment, which has shown double digit growth over the last few years in the U. S. Has convinced us that the trend that started with the familiarity of the tortilla as a case in indestible product for all cultures diet and the preference of value added products have remained and expected to keep increasing our decline even in a post pandemic market. Meanwhile, globally, the full service channel continues with a slow pace recovery towards the pandemic level, at which point we will see the great benefit of having a strong retail base coupled with returning growth from the full service business, which is already almost been at the pandemic levels again. During the quarter, however, BDC, our volumes have temporarily decreased, driven mainly by lower cornflour sales. The comparison base of Q1 2020 was a high ratio to other comp, as a result of the pandemic, increase our volumes more so considerably a year ago from a worldwide spike in effect. That, coupled with the severe weather conditions in the U. S. And Mexico, presented a challenging environment for volume output in our cornflour operations during this event in February. On the back of these fundamentals, volumes also dropped 3%. However, due to a shift of our value added products within our portfolio, we were able to increase revenues by 3%. Costs increased especially from Coney Mexico, taking a toll on our EBITDA, leaving it almost flat relative to a year ago at ARS 2,472,000,000. We are pleased with our performance for the quarter as it underscored a positive evolution of our retail channel, which as you know, is part of our overall strategy. This positive evolution can be seen in a compounded annual growth rate. We have experienced the sales, EBIT, EBITDA and net income, which has grown 9%, 12%, 10% and 30% respectively since the Q1 2018 before the change in fundamentals from different end of the year. Given the temporary nature of these effects I just mentioned in our income statements, we are confident that we have a great base to get back on track when there is additional cost effects. Off. We know that the future cost of our raw materials, core in the Pacific, has been a concern to the market. And we want to reassure everyone that as always, we remain vigilant for any cost fluctuations that will affect our margins in the long term. In terms of our balance sheet, we have refinanced $200,000,000 in dollar and peso denominated liabilities through a credit facility with a maturity of 5 years and an interest rate of LIBOR plus 100 basis points per year. This is part of our effort to optimize our capital structure, and we will remain proactive in making the financing opportunities. This quarter, relative to December 2020, we increased debt outstanding by $1200,000,000 standing currently at $1,500,000,000 However, our net debt to EBITDA ratio remains at 1.5 times. In all, although we have to face a challenging environment for the various reasons IONIQ and mineral oil, we feel encouraged by the fundamentals we see in the market and the product line we have lined up to match demand during the rest of the year. Now let me give you a brief drop down in our subsidiaries performance during the quarter, so you can get a good idea about the fundamentals in each region. In the U. S, sales volume decreased 3% as the 7% drop in volume sold of cornflour overshadowed the performance at our Tia Retail business line. A much higher comparison base in Q1 2020 due to the stockpiling that took place at the start of this pandemic during the first half of twenty twenty and severe weather conditions hindered our cornflour operations during February in this region. As volume decreased, a more profitable sales mix with a greater composition of value added products supported our message reaching a 3% growth. EBITDA increased 2% to MXN2,354,000,000 and EBITDA margin declined 20 basis points to 18.5 percent from 18.7%. At Gimsa, sales volume decreased 1%, also as a consequence of the higher base of comparison in the Q1 2020 due to the stockpiling effect I already mentioned that took place globally during the first half of twenty twenty. And also, in store traffic was lower than a year ago as a result from the COVID-nineteen pandemic. Net sales increased a percent to MXN 5,628,000,000 due to price increases implemented during the Q1 2021. These increases took place at the middle of Q1 2021, generating a revenue defacing effect relative to cost. The higher cost of corn has not been fully reflected in price increases and as utility costs added to our cost of goods sold from the freeze in the month of February, EBITDA was 34% lower at MXN615 1,000,000 and EBITDA margin declined 600 basis points to 10.9% from 16.9%. We would also like to inform you that we have already implemented a second price increase of MXN300 per ton, which became effective on April 15. This price increase will offset the phasing effect of costs over revenues that took place during the quarter. In Europe, sales volume declined 17%. We saw a 22% drop in volumes sold at our milling operations resulting from higher sales generating during Q1 2020 and lower sales derived from the COVID-nineteen pandemic. The Turkey operations also continued to disrupt, decreasing the sales volume by 9% as higher volumes sold on the retail channel were not enough to offset the decrease in volumes sold to our full service business. Following these fundamentals, net sales decreased 2%, while EBITDA rose 130% to ARS 237,000,000 from a recovery of an insurance claim worth ARS 202,000,000. Lastly, in Central America, volumes remained flat as we have higher demand in Honduras, but lower volumes sold to welfare program food program in Guatemala as well as lower demand in supermarkets and grocery stores relative to Q1 2020. This in turn created a 2% net sale decrease to MXN1257 million, driven mainly by a change in the sales mix relative to Q1 2020. EBITDA decreased 9% to ARS137 1,000,000 and EBITDA mainly fell 90 basis points to 10.9% from 11.8%. After oil subsidiaries, operating income increased ARS141,000,000 to ARS169,000,000 given the strong performance that Asia and Oceania have had at Tortilla and Flatbreads have been accepted and we are successfully in this region in addition to overall fuel corporate expenses. In terms of capital in this quarter, we invested approximately ARS 43,000,000 in capacity expansions in Malaysia, construction work at our plant in Indiana and upgrades for the reopening of the Tocquevan in Amajane, Nebraska among other upgrades in technology, infrastructure and maintenance across all of our plants. On the coming note, I would like also to communicate that we will hold our Analyst and Holders meeting tomorrow morning, where we are set to look for approval with regards to the dividend payment of MXN5.20 per share and the cancellation of 11,300,000 shares that were bought from April 2020 to April 2021 as part of our share repurchase program. With that, I would like to open the call for questions from our listeners today. Melissa, could you please open up the call for questions, please? Thank you. We will now begin the question and answer session. You. Our first question comes from the line of Ben Theurer with Barclays. It's a twofold question. So first, obviously, and you've mentioned a little bit corn cost pressure in Mexico. But considering the entire operation, not only Mexico, but also the U. S. For now, with corn prices just making one record after another, we're almost at 6.50 a bushel now. It was about 5.60, 5.70 throughout the quarter, but it continues to go up. I remember, I think you said in late 2020 something around close to $4 being hedged for 2021. So it doesn't impact that much, I suppose, on the short term. But thinking forward, how are you thinking about input cost pressure and what does that mean for your profitability? That's one part of the question. And the second, just along those lines, how do you think about the ability to put price increases through both in Mexico as well in the U. S. In order to offset the input cost pressure? Thank you. Sure. Thank you. Well, talking about the hedges, as you already mentioned, we already raised the full corn in the U. S. For the 2020. And we already have about 20% of the corn that we will mill during 2022, already hedged at $4.50 per portion. We are there basically and what we are now is analyzing kind of structure just to try to be to be or to have a hedge for the Panama you said, prices, corn prices have been going up. And we are not expecting to have any kind of the rest of the prices of corn during the rest of the year unless the corn harvest in the U. S. Be substantially extraordinary or remarkable for the year, which we are not expecting in this particular case. Then what we see is we are looking kind of a structural kind of collar option just to if not to set the price for 2021, just for 2022, just to do not fix or set the price for the mid year and see that maybe corn prices could go down because of an extraordinary corn harvest. So you want to do just to have kind of flexibility with a color or something about that. You also try to be at least a little bit better than the market or than our competitors in terms of the cost of color. Curve. Okay. In terms of pricing power? Yes, yes. In terms of pricing power or the price increases in the U. S, let me tell you that in the comparable side, we are not expecting to have any kind of future because this is an agreement that we've been operating within the last 25 years in the U. S. We will move the price according to the average prices of corn for the full year or for the year, which means that from in order to maybe August or September 30, what will be the average, and it will be compared with the cost of corn that we are currently milling. And then it will be the increase. Also, we can impact those increases in the cauliflower according if we have some tariff increases on the transportation basis of this corn. In that of your side, let me tell you that we already increased prices during this quarter on the full service. We have been to increase prices on retail. It's not going to be an easy way to do it. But we're going to do that and we are expecting to make an approach with the retailers by the middle of the year, which is basically the very good time to talk about those matters. But according with the current cost of coal in the market, we are expecting to try to have kind of success. If not, maybe what we can do with them is to try to limit the portfolio of products not moving the price and be some more higher portfolio products, which we can lease prices or we can move the prices. And of course, in the line of value added products, we can also manage our prices with the retailers. Then we think that we can get something from them. Business in the U. S. As well as also we increased prices in Mexico. No, excuse me, we increased prices in Europe, in the tortilla side. In Mexico, we increased prices in the tortilla. We increased prices, as I already told you or explained in gambling. We increased prices in Florida 15. In the cornflowers, we implemented MXN 6.50 per ton. And to complement all the cost increases in utilities and gas, in Brazil, in Brazil being Ecera, we make an additional price increase of pesos per ton. It was affected by last April 15. And with that, we already complete all the effects or cost increases that we are needing during the first half of the year. For the second half of the year, what I can tell you is that we already have kind of options for the full corn that we will build during the second half. That will allow us to have a lower cost corn than the market. We have no hedge currently because what we need to do is to push the corn once the corn harvest in Mexico take place, which will be in May June, July even. And maybe we will be required to make an additional price increase just to reflect the cost of the corn. But this is going to be for the whole industry because all of the participants, not only in the cornflowers side, but also on the traditional side of process to make tortilla, they are now having a tremendous price increases of the raw corn in Mexico. Just to give you an example, at the beginning of the year that we are producing the Asia, the producers get bought the corn at MXN 3,600 per ton, currently higher than MXN7000 per ton. And it's going to be even higher because the cost of corn will be higher for the second half of the year. China is still pushing additional corn for the requirements and it's moving the market. We are participating there. The company feel comfortable that we will be able to increase prices in the states of Brazil, Mexico, And we can recover the cost increase in that one because it's going to be again for the food industry, for the full category, not only for the country. Okay. And then just one last. Do you expect any pushback from the political side? I mean, there's always been a lot of talk around, and it's been it's come up already in the past. So how do you think the current government thinks about increasing prices on a basic food item? It was yes, yes. It was at the beginning of the year. So we have the machine learning has caused to delay a little bit to be faced a little bit of the peso increase because they didn't want to have a growth in the price of the tortilla at the beginning of the year, which would be rise in increase in the inflation rate. I think it was a worry for them at the beginning of the year and it's reasonable and ready to do that. For the second half, we are not expecting to have any kind of a call. Of course, if so the case, we need to talk to them just to explain them the cost of the corn, the cost of the utility, the cost of everything is going up and probably we need to restrict these price increases. This is something that maybe we will face, but if not the case, I think we will find out the way to increase prices in a given debate. Okay, perfect. I'll leave it here. Thank you very much. Sure. Thank you. Our next question comes from the line of Emiliano Hernandez with GBM. Please proceed with your question. Good morning, Raul. Thanks for taking my question. Just first a quick one. Did you feel confident with your guidance here on the last conference call? And then my second question is regarding the impact on Mexico's EBITDA margin during the quarter. Could you give us more color on how much of the impact was explained by the extraordinary expenses you comment coming from the severe weather conditions in the quarter? Yes, sure. Let me tell you. In terms of the guidance that we already gave you during the last conference call, what I can tell you is basically I wanted to change a little bit at Ginza because of the effect that we have this quarter. Volume, how we can expect for the year is going to be something between 1% to 2% volume growth. However, because of the price increases, we're expecting to have sales net sales growing at about 7% to 10%. However, EBITDA margin, we are expecting to be something about maybe lower than 100 basis points, maybe 100 basis points lower than the quarter, but the margin we shared with you during the last quarter. It's going to be something around 50%, 15%, excuse me, 15% for the full year. In Europe, we were talking about last time 5% growth in volume. We are expecting now to be something about 2% to 3%. In terms of net sales, we are expecting to be something about also something between 3% to 5%, which will be maybe a little bit lower than we shared with you last time. And EBITDA margin, we are expecting to be something about 8% or something above. And so the earnings growth would be basically the same and that would be largely consolidated figure that in terms of volumes, we can find we can have instead 2%, 3%, it's going to be more maybe more close than 2% instead of 3%. Sales growth, it is in net sales, it will be missing the digits, maybe 5% to 6% or 5% something about that higher. And the margin we are expecting to be basically flat throughout the year. Now this change a little bit the guidance for the full year and this is going to be according to what we already paid during this quarter. In terms of how was the what the cost we faced during this quarter, particularly in Ginza. In terms of cost, let me tell you, first of all, because of the price we faced in we did, we had an impact in the quarter of about ARS 285,000,000. And in utilities, we have a net special charge of natural gas from our distributors for about MXN 80,000,000. We are challenging this charge from our distributors and we are in negotiations with them. We are expecting to recover part of this charge. We are not sure how much will we recover and when. But I'm sure that it will be something that maybe we can renew this amount. The total effect of these charges during the Q1 for Giza was about MXN 365,000,000, which represented the 600 basis points the use on EBITDA. Now because of the prices, a price increase was already implemented, we are expecting that for the second half of the year, a big part of this ARS 285,000,000 because of the price we're facing, it was recovered. And we are expecting at least maybe 50% of this ARS80 1,000,000 to be recovered. Then we are expecting an improvement, an important improvement during the second quarter of the year for years in terms of EBITDA. Very, very clear, Raul. Thank you. Sure. Thank you. Our next question comes from the line of Filipe Uchos with Scotiabank. Please proceed with your question. Yes. Good morning, everyone, and thanks for the space for questions. I think Ben asked a couple of my questions. So just one left. In the U. S, what do you expect the competition to do? Do you think that they will also be trying to argue with retailers for a higher price? And if you see that your competitors increase prices, you're obviously in a very good hedged position for the year. Is your preference to take market share? Or would you like to increase prices with competition if they do that? Well, let me tell you. First of all, for most of our competitors in the tortilla, you are talking about tortilla Dimas or tortilla side or conflabor side or both? Tortilla. Tortilla, right. Let me tell you, for most of our competitors in the U. S, we supply them the cornflour to major on tortillas. Keep in mind that we have about 85% of market share in cornflour in the States for it's truly free related, of course. In cornflour for both tortilla and tortilla chips. In an industry or in these categories, about 75% or 80% maybe in this particular categories, maybe 85% of these categories are prepared with cauliflower. Then all of them are followers. Of course, if you do not increase prices, they will not. Or some of them, they will ask for price increases, just to try to recover because they're going to have very bad times. And but again, the company will try to do that. We let me tell you, talking about retailers, you mentioned if we will favor in, if I will say you well, we will favor in the margins instead of sales. We cannot be out of our retailers, of course, but we will find out the way to do it. As you have seen in the last couple of 3 years, the company has not increased prices, but it has been able to increase volumes and increase the sales because of the value added products and because of a big portion of our portfolio. We are managing the prices together with the retailers and we are doing quite well. We will find out a way to make a good performance of that, and we will recover the cash increase on that. And for the next year, I think it's going to be quite clear that the prices of corn in WhatsApp, in WhatsApp, in WhatsApp is going to be understood by the retailers, and they will need to accept a price increase because nobody will be able to provide a tortilla without increased prices. Okay. Great. That's great color. Let me ask you a follow-up. Do the retailers have a lot of private label? I mean, are they going to increase in corn themselves? Can you repeat the question, please, Philippe? Yes, of course. Do the retailers have a lot of private label brands in Tortilla? I mean, are they feeling the pinch of corn costs as well? Well, the retailers, they are really the prices of the economy is public and is in the open market and they know very well what is happening with that, then they will increase prices also, of course. Okay. Very clear. Thanks a lot for the color. Sure. Thank you. Our next question comes from the line of Lucas Ferreira with JPMorgan. Please proceed with your question. Hi, how are you? I just wanted to follow-up on the guidance and just to understand what was exactly kind of the surprising factor to you guys because the guidance that you gave was actually published in the end of February, right? So within like 2 months of the quarter already. And at least the public corn pricing that we track, it haven't shown any major surprises by then. So I just wanted to understand if there was any other surprising factor May, March that could justify this major drop in the margins in Mexico in the Q1 that you're not forecasting in the end of February. And just to double check your new guidance, you're talking about something like 100 bps decline in margins. If not mistaken, that will imply that on average on the last in the next three quarters, you have to have an EBITDA margin of around 16.5%, which is higher than the average actually higher than the average you have been posting in the last couple of years. So do you think this additional price increase will be able to cover in this cost pressures you're seeing? Are you ready with this price hike comfortable to reach the 15.5% level roughly? Sure. Well, let me tell you, we feel comfortable with this guidance in the last call in February. We didn't have the effect of the severe weather. And let me tell you that because of the Texas government stopped the supplier, naturally asked for all the facilities in the state in Texas. We shut down the cornflour facilities in the U. S. For a week basically, and we were not taking that into consideration, of course. In Mexico, we were able to continue producing. Even we moved to some other kind of energy just to need to produce the cornflour, But we work at a lower rate than we used to run off our facilities. That's why with this, we feel quite comfortable. That's going to be we expect it to be with reachable this guidance. And for the year, you will see the sales that we have in the States now after the severe weather is going up, is going up in a very good way. We are recovering in the world the sales to the food service doing quite well in Asia in China, doing much better in Europe. In Europe also, we took advantage of the pandemic. We entered most of the retailers in Europe with our brand, which is a better price than the private level we were producing for some of our retailers. That was in case in the States as well as in Mexico. Then we feel comfortable with that and we believe that it's going to be something that we will reach throughout the year. Thank you. Thank you. Our next question comes from the line of Isabella Simonato with Bank of America. Please proceed with your question. Thank you. Good morning, everyone. So my question will be mainly on the U. S. Market, right? The vaccine nation is being rolled out and probably the economy will be almost fully opened during summer, right? What sort of structural change in consumption habits are you anticipating? I mean, will people continue to eat more at home even with their lives pretty much back to normal? How are you forecasting volumes not only for this year but beyond, right? How much of a tough comp 2020 2021 will be for 2022? Sure. Thanks, Elena. Well, let me tell you that what we did basically in the year, it was taking out the peak of the sales on retail because of the pandemic and have the run rate of about 1.5% to 2% growth for the year in terms of volumes on retail and a recovery in the second half of the year on the full year, particularly in the U. S. We are now facing a most rapid recovery in the full service in terms of the sales to retail are doing well. It will be lower because of we have the peak of our sales during the last year in March April or this quarter, particularly this quarter, we had a peak of this pandemic. But if you remember to our conference call last year, we always were talking about when you guys asked the question about what you can expect in terms of growth for the mid year's IOV sales. Well, taking out the peak of the Americas, this is an extraordinary sales that we were not expecting to have. That was what I see is that retail is higher than, let's say, if you see the growth from Q1 2018 to Q1 2021, that the rolling rate of the company is going up in a very healthy way. And the habits, we are not expecting to change the habits out there. A lot of people are still working at home. A lot of people because with this pandemic, they were now using at home the wrap and the wrap is very well consumed. You see Norway, for example, area of region, where it's about 20%, 25% rate of our products. And this is again because it was too long time in home. Now they already took the wrap as a way part of the mainstream consumption for them. Then we are expecting, of course, climate change a little bit, but not too much. And now everything is going up in retail and it is going up for service. But again, retail take out a little bit this peak of sales because of the pandemic, the panic purchase people make. And then for 2022, we can expect again that one in regular in both in Fuservi as well as in concrete. Thank you. Thank you, Fussevira. Thank you. Our next question comes from the line of Barbara Halberstadt with JPMorgan. Please proceed with your question. Hi. Thank you. Most of my questions have been answered, but I would like to follow-up on the Mexican political landscape and the outsourcing bill, if you could comment at that, if it does impact you, and if it does, how much you would expect an impact from this new bill? And then on the second question, as you are adjusting your outlook for 2021, would you also review CapEx and shareholder securitization numbers? Thank you. Sure. Well, talking about the sourcing, we already are taking some actions. We have not too much people outsourcing the company. Really, it's a very small part of the people, particularly in some of the plants. What we are doing is basically changing the agreement that these are particularly with the transport people, which can be, let's say, considered as an associate. Then what we are doing basically is just signing an agreement with them just to be clear that they're going to give us the service of potential of cornflowers or corn or whatever. There are any kind of implications. And we are not expecting to have any kind of issue on that. We already view everything that we already have. And we understand this having some materiality on this issue. And of course, the resources that we already have because of the corporate deficits, we have not an issue with that. In terms of CapEx, we want to keep the same amount that we have already discussed with you guys. Last couple of calls, if you want to be something about between $300,000,000 $320,000,000 We are not sure if we are going to be able to be investing in the way that we can invest. But if we can do it, that's what we want to do. What do you want to do basically just to start up the Omaha and Alaska facility beginning second half of this year and the Indianapolis facility beginning in 2022, going through that just to invest to accelerate our EBITDA, our CapEx. We are focused on that and we want to keep the same amount. Perfect. Thank you. Sure. Thank you. Our next question comes from the line of Alvaro Garcia with BTG Pactual. Please proceed with your question. Hi, Raul. Hope you're well. Can you hear me? Yes, yes, Raul. Thank you. Perfect. Thanks to you. I hope you're welcome. Great, great. My question is also on the U. S. On pricing power generally, but we've had a lot of questions today on the topics. I was wondering if you could take us back in time a little bit back maybe back to 2011, 2012, part of 2013 where we saw a similar spike in prices. I know it's a long way back, but and I know that Gruma was a very different company at the time. I was wondering if you could talk to us about your experience maybe with retailers back then trying to pass price and maybe what you learned from that experience or how Guruma is different today to cope with this increase in prices? Thank you. Yes. Thank you. Well, no, it's not a different, it's going to be normally it's going up and now what we are basically doing is focusing in the Nutraneo consumption, which is basically value added products that has been allowing us to we cannot increase prices. We can take advantage of that and we can, let's say, recover part of the price increase that we have in some products which are not quite profitable with us to this value added close. Then price increases, these retailers, of course, grew man. We have a very strong relationship with other retailers and major retailers, of course, in the States. Fortunately, for instance, we are a public company. We show our results. It was a year I don't remember it was the last year of 2019. So if you want to repeat, it says come on, see your margins and see mines will increase prices. I will take advantage of that because you have available margins and I have not. And they increased prices to the consumer, but they took everything from them and they didn't share anything from us. But in this particular case, I think we have done and it was in an environment in which that commodities were not moving up. It was basically quite stable. In this environment, we have prices of commodities. All the commodities, we're talking about corn, we're talking about wheat, we're talking about everything, it is going up in a very important way. And again, this is going to be applicable for all of the participants in this category, in the tortilla category, in the rough category, let's say. Then everybody will buy the corn, will buy the wheat, will buy the soybean at a higher cost. Because of the economies' case and because of the presence and because of the geography in the U. S, we can avoid kind of distribution costs for some others. They have couple of the facilities that they can move or they must move than the products at the longer reasons than us. Once we have operating on our high and in Napoli, we will save a lot in this situation because of that. Then these kind of things, I'm sure that will and of course, even we are high cost producer, let's say, not high cost producer, We have a higher investment to produce the TOCE because we have large innovation technology and facilities for everyone. They are quite grateful when they visit our facilities and approve everything to do for them, of course. We are more, let's say, better much better in a much better position just to capitalize that. Then, of course, if we do not increase prices, maybe even if we do not increase prices, they will need it because they're going to be really affected. The cost of raw materials is going to be substantially higher. But I think it's going to be quite reasonable for the retailers to say, okay, guys, you have a couple or 3 years. The environment is quite substantially different. You already have all these kind of regional costs, etcetera, etcetera. And that's going to be, of course, everybody will make a job. The retailers, they didn't want to see price increases. The producers, they want to see price increases. The consumer, they didn't want to see increased prices in the product. This is part of the dynamics of the market. And I'm not sure once the market, the corn market in the States destabilize, I don't know, is it going to go back to 3 $20,000,000 $3.40 or whatever it was, the prices, the average price of corn in a year. I don't know, it's going to be a new higher address price for the corn. The world growing, multiple is in China, particularly is affecting everything. And they affect us because they can push the corn in the state at $6 per bushel when they can sell in China at $11 or $12 per bushel in the corn. They are requiring the push on all the soybean from the state, huge amount of soybean in Brazil because what they need to be just to produce pork because of the the change that they've been facing and what they need to do is to recover the inventories of pork meat. Then that's why. Then I think that's the difference. The company is most valuable positioned and the retailers, we provide them most of that for TRD sold in the market. We don't want to be out of any single retailer. We don't want to seize our positions in ourselves to our competitors, of course. But I'm sure that we're going to find out a way the way to try to compensate this kind of risk through additional average prices, of course. Yes. Just I guess one follow-up would be, do you think that maybe some competitors in tortilla specifically in the U. S. Money, do you think it's so bad that maybe some of them go out of business? Or is it too early to tell now? No, I think they're going to be there. But again, if we have a higher cost of corn, we're going to have a higher percentage of cornflour that will be supplied to these guys. Yes, yes. There is no way to do it to subsidize in that way and that's what we achieved early payments. Yes, agreed. Great. Thank you very much. Thank you, Bruno. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Cavazos for any final comments. Well, thank you very much again for your participation in this call. And please feel free to call us if you have additional questions that I'm sure you will have. Please call us and we will be able to talk to you again. Thank you very much, and please stay safe. Bye bye. Thank you. This concludes today's Groumut's Q1 2021 earnings conference call. Thank you for your participation. You may now disconnect.