Alpek, S.A.B. de C.V. Class A · BMV:ALPEK/A
Alpek, S.A.B. de C.V. Class A — Q1 2021 Earnings Presentation
72 slides from Alpek, S.A.B. de C.V. Class A's earnings presentation, May 2021
Slide 1: Corporate Presentation 1st Quarter 2021
Corporate Presentation 1st Quarter 2021
Slide 2: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 3: Alpek is a large component of ALFA's portfolio of companies
Alpek is a large component of ALFA’s portfolio of companies Alfa posted US$12.3B in Revenues & US$1.5B in EBITDA1 2 Petrochemicals Food Products IT + Telecom Aluminum Auto Parts EBITDA1 37% 45% 20% - (% Alfa) 8 out of 10 #1 Producer of PTA, 11 Sigma brands 1 out every 4 new cars Mexican Corporates u
Slide 4: Alpek is one of the largest PetChems in The Americas
Alpek is one of the largest PetChems in The Americas Strong portfolio of resilient products across two main segments Comparable Net Debt / Revenues1: US$5.3B US$601M 2.1x EBITDA1: Reported EBITDA1: Polyester (75% Sales)2 Plastics & Chemicals (22% Sales)2 PTA, PET Polyester Polypropylene Expandable S
Slide 5: Our footprint now spans 31 plants across 7 countries
Our footprint now spans 31 plants across 7 countries Over 8.0 million tons and more than 6,200 employees worldwide Installed capacity breakdown (Kta) rPET Country Site PTA PET Flake Pellet SPT Fibers PP EPS Arcel CPL Other Monterrey 160 Mexico Altamira 1,000 640 240 (3,395 Kta) Salamanca 85 360 Coso
Slide 6: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 7: Investment Highlights
Investment Highlights 1 Market leadership across all our products in the Americas 2 Consumer-oriented product portfolio limits demand volatility 3 Proven track record of growth across all parts of the cycle 4 State-of-the-art technology resulting in low-cost position 5 Clear strategy & catalysts exe
Slide 8: Alpek holds leading industry positions for all its products
11. Market Leadership Alpek holds leading industry positions for all its products Polyester Industry Position1 by Product P&C Industry Position1 by Product PTA 1 The Americas PP 1 Mexico 1 The Americas Expandable 1 The Americas PET Styrenics 2 Worldwide 3 Worldwide rPET 1 The Americas CPL 1 Mexico P
Slide 9: Alpek is the largest PTA-PET producer in Americas
11. Market Leadership Alpek is the largest PTA-PET producer in Americas Market has consolidated & become increasingly organized over time The Americas PTA Capacity Share (%) The Americas PET Capacity Share (%) 7,240 6,781 Kta 9% Others Kta 7% Others 6,190 5,681 8% 5,940 5,494 M&G 14% 19% BP 8% 11% F
Slide 10: Resilient end-markets account for 92% of volume
21. Consumer Oriented Portfolio Resilient end-markets account for 92% of volume 97% of Alpek’s sales are dollar-based Volume by Industry 20201 Sales Geography 20201 Textiles 4% Construction 4% EUR 6% Asia 0.4% 92% 71% SA 22% Consumer Goods 25% USA/CAN 42% Volume 2020 Sales 2020 4,802 Kta US$5,326 M
Slide 11: Alpek has continued growing at 8.6% CAGR since 1986
31. Proven Growth Alpek has continued growing at 8.6% CAGR since 1986 Constant growth at different points of the industry cycle Sales Volume 1986-2020 (Index: 1986 = 100) PET acquisition in UK Polyester acquisition Corpus Christi IPO (BMV) U.S. PTA/ in Brazil Polymers (JV) PET plant acquisitions Sty
Slide 12: Low-Cost Position
41. Low-Cost Position State-of-the-art tech, strategically located assets & low-cost logistics yield low-cost position in industry Continuous investment in own technology has World scale production facilities make Alpek the improved Alpek’s cost position (i.e. IntegRex) low-cost producer in The Amer
Slide 13: Long-term strategy is based around 3 key pillars
51. Strategy & Mgmt. Team Long-term strategy is based around 3 key pillars 13
Slide 14: Mgmt. with 30+ years average experience in PetChem
51. Strategy & Mgmt. Team Mgmt. with 30+ years average experience in PetChem Clear strategy & culture of empowerment ensure efficient operations José de Jesús Valdez CEO (45) José Carlos Pons CFO (25) Felipe Garza Jorge Young Gustavo Talancón Alejandro Llovera José Luis Zepeda Gustavo Talancón Co-Pr
Slide 15: Innovation efforts focused on circular economy and process improvements
61. Portfolio prepared to lead in circular economy Our strong innovation efforts are focused on circular economy initiatives and process improvements In-house • Process simplification & cost reduction to Integrex Innovation PTA/PET production process (Examples) • Organic fertilizer production from b
Slide 16: Alpek strives to continue improving its ESG performance
61. Portfolio prepared to lead in circular economy Alpek strives to continue improving its ESG performance Reaffirmed commitment to ESG by joining UN Global Compact in 2021 CDP ESG Ratings Sustainalytics ESG Ratings CSA Ratings 2019 2020 54 2019 2020 Risk B- 39 32 Rating 43 44 C 35 31 32 30 28 D 68
Slide 17: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 18: Recent Financial Results
Recent Financial Results Sales Volume (KTon) Revenues (US$M) 4,802 6,991 4,402 4,384 6,216 4,012 5,231 5,326 P&C P&C Polyester 1,184 1,230 1,614 Polyester 1,433 2017 2018 2019 2020 1Q20 1Q21 2017 2018 2019 2020 1Q20 1Q21 Reported EBITDA (US$M) CAPEX (US$M) 1,063 826 220 850 Suape/ 800 789 188 Citepe
Slide 19: Free Cash Flow Generation
Free Cash Flow Generation US$M 23 2 1,219 1,185 324 30 44 67 192 FCF: US-9M Net Debt EBITDA NWC Financial Taxes CAPEX Dividends Others Net Debt Dec’20 Expenses Mar’21
Slide 20: Leverage
Leverage Net Debt (US$M) LTM EBITDA (US$M) Net Debt/EBITDA (Times) 1,436 1,428 2.0 +3% 789 2.0 2.0 1,330 769 1.9 1.9 1,235 1,185 1,219 701 1.7 657 624 601 850 821 2.1 778 1.9 735 719 1.7 1.7 1.6 1.6 565 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Comp. E
Slide 21: Balance Sheet Accounts
Balance Sheet Accounts Net Working Capital1 (US$M) Property, Plant and Equipment (US$M) 951 2,390 2,105 774 750 1,968 1,934 1,899 608 497 NWC Days 44 43 53 44 42 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Net Debt2 (US$M) Stockholders’ Equity (US$M) 1,832 2,391 2,193 2,281 2,259 1,262 1,330 1
Slide 22: Debt Profile
Debt Profile 99% of Debt denominated in USD1,2 / Debt average life @ 7.2 years Available Comm. Net Debt: US$1,219M Gross Debt: US$1,714M US$680M Credit Lines Consolidated Debt Profile2 (Mar. 2021) US$M 900 Cash 800 Bonds Bank Debt 700 Coupon 600 3.250% 600 Coupon 4.250% 495 500 500 400 Coupon 5.375%
Slide 23: Dividends
Dividends Alpek Dividends (US$M) Announced in General 250 Shareholders’ 12 Meeting 225 (To be paid in 2Q21) 11 206 10 200 178 176 9 165 160 160 155 8 143 143 143 Total Dividend 150 7 126 114 111 Shareholders 6 100 95 100 9.6 5 4 Dividend 5.9 53 6.5 3 (%) 5.6 Yield 50 3.4 3.4 2 3.0 2.1 1 0 0 0 2013 2
Slide 24: Results by Quarter
Results by Quarter Sales Volume (KTon) Revenues (US$M) 1,260 1,248 1,643 1,614 1,121 1,109 1,184 1,230 1,523 1,118 1,059 +4% 1,407 1,392 1,433 1,325 1,175 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Reported EBITDA (US$M) Majority Net Income (US$M) 400 209 356 231 Cogen 188 217 Sale Lotte Bus. 121 201 203 99 173 Comb.
Slide 25: EBITDA Breakdown
EBITDA Breakdown 1Q21 EBITDA (US$M) 324 17 Others 63 +35% 123 P&C 58 203 17 147 151 3 4 97 50 66 184 Polyester 94 81 89 1Q20 Comparable 4Q20 Comparable 1Q21 Comparable Carry-forward Effect Inventory 1Q21 Reported EBITDA EBITDA EBITDA EBITDA Adjustment
Slide 26: Breakdown of Extraordinary Effects
Breakdown of Extraordinary Effects 2020 2021 Δ 1Q21 vs. M dls 1Q 2Q 3Q 4Q 1Q 1Q20 4Q20 Reported EBITDA 111 74 179 201 324 214 123 Inventory Adjustment 17 42 (16) (9) (63) (80) (54) Carry-Forward Effect 20 39 (6) (9) (58) (78) (49) Others - (6) (3) (33) - - 33 Comparable EBITDA 147 149 154 151 203 56
Slide 27: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 28: Texas Polar Vortex
Texas Polar Vortex Operations • USGC producers impacted by lack of Power, Natural Gas and/or Feedstocks – • All Alpek sites continued operating as normal • Producers of feedstocks (Ethylene, PGP, MEG, Styrene) & finished goods (NG, PP, EPS) offline Demand • Demand continued to be high, drawing = inv
Slide 29: Alpek 2031 Bond Emission
Alpek 2031 Bond Emission Principal Amount US$600M Maturity Feb. 2031 (10 Years) Coupon 3.25% (-1.00% vs.’29 Bond) Spread 200bps (-55bps vs. ’29 Bond) US 10 Yr T. 1.28% (vs. ~1.68% on April 1) Order Book US$5.4B (9.0x Over-subscribed) Strong participation from Other Notes ESG-focused funds 29
Slide 30: CCP Update
CCP Update • Pre-construction period extended through end of 2021 • Stronger PET demand in NA supportive of project • Focused on minimizing CAPEX & optimizing timing • Front-loading engineering work & analyzing all options PTA PET 1.3 M tons 1.1 M tons Own Px • PET (Int.): 367 Kta & MEG • PTA: 125 K
Slide 31: CO2 Recovery & Liquefaction JV
CO2 Recovery & Liquefaction JV • 50/50 Joint Venture with ContourGlobal • 70,000-Ton CO2 facility linked with Cogeneración Altamira • Meeting the rising demand of food-grade CO2 in Mexico • JV leverages both partners’ core strengths • Final investment decision expected by 3Q21 Strengthen Foster Circ
Slide 32: NOVA Chemicals' Expandable Styrenics Business Purchase
NOVA Chemicals’ Expandable Styrenics Business Purchase 204 529 36 ARCEL® EPS 168 20 19 325 46 240 NOVA KTA MEX BRA CHI ARG Pre- USA Post- Acquisition Acquisition Strengthen Foster Circular Strategic & Core Business Economy Focused Growth ✓ Global Cost ✓ Sustainable Product ✓ Value Chain Integration
Slide 33: Growth in rPET Capabilities
Growth in rPET Capabilities 207 Up to 120KTA at 60 2020 25% recycled content 132 PolyQuest (Darlington, SC) Cooper River & Cosoleacaque Poseidon 45 Plastics 147 2019 30 (UK) 30 15 15 K Tons Bottle to Flake to Single Pellet Enhanced Total Flake Pellet Technology® Recycling Strengthen Foster Circular
Slide 34: ALFA's Unlocking Value Initiative
ALFA’s Unlocking Value Initiative Nemak Axtel Lower Alpek Spin-off Sale Debt Spin-off 2020 TBD TBD TBD Alpek’s • Spin-off not expected in 2021 Transition Plan • Working on becoming fully independent from ALFA’s corporate services Potential • No impact expected to Alpek’s SG&A Impact & Benefits • Pos
Slide 35: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 36: Indexed Google Searches 2009-2020
INDEXED GOOGLE SEARCHES 2009-2020 Every bottle ends up in the middle of the ocean, I’ve seen the images on TV A friend told me that glass is the most eco- friendly option, so I always go for that if I can Companies care more about their sales than the environment. Just look at any supermarket aisle
Slide 37: PET is #1 for a reason
’ PET is #1 for a reason 100% RECYCLABLE HDP PVC LDPE E RECYCLED AT HIGH RATES ONLY PLASTIC THAT CAN BE REMADE BACK TO ITS ORIGINAL PURPOSE PP PS OTHERS HOWEVER, THEY ALL GET BUNDLED TOGETHER,
Slide 38: These are their stories.
Although Alpek plays an important role as the largest producer and recycler of PET in the Americas, we’re not the only ones involved in its lifecycle. So rather than hearing it from us, we’d like to introduce you to some people that can better explain The Case for PET based on how it touches their l
Slide 39: "PET is simply a better product"
«PET is simply a better product» For a while now, we wanted to sell more of our berries in the local supermarkets, but packaging was a problem. We used carton but there were a lot of disadvantages, for example if the package got too wet, like from the humidity in the supermarket refrigerators, it wo
Slide 40: With the same kilogram of material, you get
With the same kilogram of material, you get: For the cost needed to produce 1 glass bottle, you can produce up to 8 PET bottles. x x CENTS x BPA & Phthalate free, as well as the only widely Unlike glass and aluminum, PET can be transported with available individually packaged resealable option. mini
Slide 41: "PET keeps me safe"
«PET keeps me safe» The current health emergency caused by the Coronavirus has taught us many things about our life and ourselves in a very short period of time. Something I didn’t expect to learn was the importance of PET for us, as doctors and patients. To me PET was just the water bottle I used w
Slide 42: You can easily identify PET products
You can easily identify PET products, just look for the
Slide 43: "Educating towards smarter choices"
«Educating towards smarter choices» From my perspective there have never been more options in terms of the products we consume every day. I go to the supermarket and for just one thing, let’s say orange juice, there are like 3 different packaging options: PET, glass and cardboard. My job is to encou
Slide 44: Beverage packaging industry units by substrate 2000-2019
B E V E R A G E PA C K A G I N G I N D U S T R Y U N I T S B Y S U S T R AT E ( B U N I T S ) 2 0 0 0 - 2 0 1 9 B UNITS
Slide 45: Worldwide aluminum, glass and plastics
98% 69% 65% 58% 46% 30% 16% ALUMINUM GLASS OTHER WORLDWIDE WORLDWIDE WORLDWIDE PLASTICS
Slide 46: "We should think about the big picture"
«We should think about the big picture» I think society has focused on solving the waste problem, and we definitely need to solve that, but we shouldn’t lose sight of the real problem facing our generation: climate change. Said differently, if all we do is recycle more, does that mean we are doing l
Slide 47: Let's put it into perspective
187 gr. CO 182 gr. CO 2 x 2 x Let’s put it into 37 gr. CO 2 x perspective» CARBON FOOTPRINT OVER LIFECYCLE, PER 355 ML. BOTTLE.
Slide 48: Let's put it into perspective
90 gr. CO x2 Let’s put it into 31 gr. CO 2 10 gr. CO x perspective» 2 x CARBON FOOTPRINT OVER LIFECYCLE, PER 355 ML. BOTTLE.
Slide 49: Made at temperatures hotter than lava
IS MADE AT TEMPERATURES HOTTER THAN LAVA. IS MADE AT A TEMPERATURE HOTTER THAN THE SURFACE OF VENUS. IS MADE AT THE SAME TEMPERATURE NEEDED TO MAKE A NICE SLICE OF PIZZA.
Slide 50: Think back to the last time you had a burger
Think back to the last time you had a burger… What if I told you, you could wash it down with and still
Slide 51: CO2 emissions of flying NYC to San Francisco vs recycling PET bottles
The CO2 emissions generated by flying from NYC to San Francisco is equal to that from recycling PET bottles
Slide 52: "PET is my livelihood"
«PET is my livelihood» I know it might not sound very attractive, but my job is to find and separate PET from the rest of your garbage. Why? Because certain people are willing to pay me good money for it. There are collection points all around my city, they buy the PET from me, and then they sell th
Slide 53: Increase recycled PET production and promote recycling
· Increase Recycled PET production · Meet bottlers’ needs · Improve Recycled PET technology · Use higher rPET content ® · Design for higher recyclability · Willingness to source rPET · Promote recycling · Promote use of lower CO2 products · Promote and offer recyclable products · Offer recycle solut
Slide 54: "We have a clear goal"
«We have a clear goal» I have proudly been part of Alpek for the last 4 years. Sometimes I’m questioned by my family about my work because they’ve heard negative stories surrounding plastics. But I know that PET is unlike any other plastic. I’m convinced that for us to achieve a true change in our s
Slide 55: Alpek is leading the way
Alpek is leading the way Today we already recycle each year And we’re aiming to reach To get there, among other initiatives, Alpek has joined associations such as to develop more trash gathering infrastructure in major US Cities.
Slide 56: Recycle, promote recyclable materials, share knowledge
1. Recycle! As much as you can, and not just PET, but every product you come across. 2. Promote the use of fully recyclable materials in any place: your home, your work and even in your favorite coffee shop. 3. Share your newfound knowledge about PET and recycling, to speed up our progress towards a
Slide 57: Index
Index Alpek at a Glance Key Investment Highlights Financials Relevant Events The Case for PET Appendix
Slide 58: Polyester Value Chain
Polyester Value Chain Crude Oil Refinery Naphtha Reformer/BTX PET rPET 0.84 ton PTA per ton PET 0.66 ton PX per ton PTA PX PTA 0.34 ton MEG per ton PET Fibers & Filaments 0.80 ton Ethylene 0.72 ton EO per ton EO per ton MEG Ethane Cracker Ethylene Ethylene Oxide MEG (From Natural Gas) 58 Source: Alp
Slide 59: Polypropylene (PP) Value Chain
Polypropylene (PP) Value Chain 1.01 ton Propylene per ton PP Ethane / Propane 59 Source: Alpek, Nexant
Slide 60: Expandable Styrenics (EPS & ARCEL®) Value Chain
Expandable Styrenics (EPS & ARCEL®) Value Chain Crude Oil Refinery Naphtha Reformer Pentane 0.06 ton Pentane Benzene per ton EPS 0.79 ton Benzene per ton Styrene Ethylene 0.29 ton Ethylene 0.94 ton Styrene per ton Styrene per ton EPS Ethane Cracker Styrene EPS (From Natural Gas) Arcel® Polyethylene
Slide 61: Caprolactam (CPL) Value Chain
Caprolactam (CPL) Value Chain Crude Oil Refinery Naphtha Reformer Cyclohexane Caprolactam Benzene 0.94 ton Bz per ton Cyclohexane 0.99 ton CX per ton CPL Nylon Natural Gas Syngas Ammonia Ammonium Sulfate Fertilizers 61 Source: Alpek, Nexant
Slide 62: Latest Quarter Results
Latest Quarter Results Results and Key Metrics 1Q21 4Q20 1Q20 QoQ (%) YoY (%) Volume1 (ktons) 1,230 1,248 1,184 (1) 4 Polyester 996 992 967 - 3 Plastics & Chemicals 234 256 217 (9) 8 Production (ktons) 1,621 1,612 1,583 1 2 Polyester 1,346 1,343 1,318 - 2 Plastics & Chemicals 274 269 265 2 3 Revenue
Slide 63: Latest Quarter Results
Latest Quarter Results Cash Flow QoQ 1Q21 4Q20 1Q20 YoY (%) (%) EBITDA 324 201 111 61 193 Net Working Capital & Others (192) (16) 100 (1,119) (292) CAPEX (30) (97) (15) 69 (107) Financial Expenses (67) (23) (26) (194) (154) Income Tax (44) (24) (64) (80) 31 Dividends (23) (15) (163) (52) 86 Other So
Slide 64: Relevant References: Crude Oil
Relevant References: Crude Oil Price increased during 1Q21 as quotas met & demand for refined products rose US$/Bbl Brent Crude Oil Price 120 99 100 80 71 64 61 60 52 54 44 42 40 20 0 2014 2015 2016 2017 2018 2019 2020 2021
Slide 65: Relevant References: Paraxylene
Relevant References: Paraxylene Px prices increased by 30% in line with Crude Oil price (+36%) US$/Ton NA Px Contract Price 2,000 1,708 1,635 1,641 1,500 1,382 1,174 1,165 1,077 992 954 955 1,000 937 891 876 876 658 685 590 500 0 2011 2012 2013 2014 2015 2016 2017 2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 201
Slide 66: Integrated PET Margins
Integrated PET Margins Margins increased by 36% QoQ due to strong demand US$/Ton Asian Margins (Px / MEG to PET) 600 China 500 400 382 +36% 370 324 330 304 310 300 277 275 266 214 250 242 227 223 260 227 214 164 200 227 249 PET 208 192 196 145 172 175 165 159 100 155 140 122 110 69 62 64 73 82 78 83
Slide 67: Relevant References: Propylene & Polypropylene
Relevant References: Propylene & Polypropylene Increase in both PGP contract prices and PP margins due to polar vortex NA Propylene Contract Price (PGP) NA Polypropylene Margin (PP to PGP) cpp cpp 80 76 35 73 32 71 70 69 30 60 27 60 54 25 24 22 22 50 21 45 19 41 20 39 37 17 40 15 16 34 35 15 31 15 1
Slide 68: Relevant References: Caprolactam
Relevant References: Caprolactam US$/Ton Asian Caprolactam to NA Benzene Spread (Contract) 2,400 2,100 2,100 1,800 1,500 1,281 1,240 1,231 1,272 1,200 1,137 1,069 1,075 976 943 900 840 862 727 692 739 644 669 606 600 549 300 0 2011 2012 2013 2014 2015 2016 2017 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Slide 69: Stock Highlights (BMV: ALPEK)
Stock Highlights (BMV: ALPEK) Daily Stock Price (MXN) 30 25 Valuation 2018 2019 2020 1Q21 20 15 10 Market Cap. (US$B) 3,040 2,571 1,543 1,931 5 Jan May Sep Jan May Sep Jan Mar Net Debt (US$M) 1,832 1,330 1,185 1,219 2019 2020 2021 EBITDA LTM (US$M) 1,063 850 565 778 Enterprise Value / 4.8 4.9 5.3 4.
Slide 70: Alpek's Investor Relations Team
Alpek’s Investor Relations Team Email: [email protected] / Phone: +52 (818) 748-1146 Alejandro • 10 Years at Alfa/Alpek Elizondo • Previously held roles as Director of Logistics & Procurement at Indelpro, Director of Energy Markets at IRO Alfa, and Project Leader at The Boston Consulting Group • BS in In
Slide 71: Disclaimer
Disclaimer This presentation contains, or may be deemed to contain, “forward-looking statements”. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of Alpek
Slide 72: Corporate Presentation 1st Quarter 2021
Corporate Presentation 1st Quarter 2021
Alpek, S.A.B. de C.V. — Q1 2021 Earnings Presentation on 6ix