Bachoco Announces First Quarter 2021 Results

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Industrias Bachoco reported robust unaudited results for 1Q21, with net sales increasing by 23.0% year-over-year to $19,357.6 million. The EBITDA margin improved significantly to 15.1% from 6.0% in 1Q20, driven by better pricing and operational efficiencies despite rising raw material costs, which increased 11.7%. Net income reached $2,074.6 million, a decrease from $2,170.2 million in 1Q20, leading to earnings per share of $3.50. The company maintained a strong cash position of $19,791.7 million as of March 31, 2021.

Positive

Net sales increased 23.0% year-over-year to $19,357.6 million.
Improved EBITDA margin from 6.0% in 1Q20 to 15.1% in 1Q21.
Gross profit up 93.4% to $4,218.0 million, gross margin at 21.8%.
SG&A expenses decreased as a percentage of sales from 10% to 8.5%.
Strong cash position of $19,791.7 million.

Negative

Net income decreased by 4.4% from $2,170.2 million in 1Q20 to $2,074.6 million in 1Q21.
Earnings per share down from $3.61 in 1Q20 to $3.50 in 1Q21.
Total taxes reduced by 6.6%, indicating potential tax challenges.

04/29/2021 - 05:15 PM

Industrias Bachoco, S.A.B. de C.V., “Bachoco” or “the Company”, (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the first quarter (“1Q21”) ending March 31, 2021. All figures have been prepared in accordance with International Financial Reporting Standard (“IFRS”) and are presented in nominal million Mexican Pesos (“$”), except earnings per share.

HIGHLIGHTS- 2021 vs. 2020

Net sales increased 23.0% in 1Q21.
EBITDA margin was 15.1% in 1Q21 vs 6.0% in 1Q20.
Earnings per basic and diluted share were $3.50 in 1Q21 vs $3.61 in 1Q20.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, “We continued observing a good balance between supply and demand which allowed us to achieve outstanding results in our first quarter of 2021, despite adjustments in sales volume, as a result of remaining COVID-19 confinement measures that had effects in some of the markets in which we compete.

Regarding our cost of sales, this quarter we observed the impact of higher raw materials prices in USD terms. Overall, our cost was 11.7% higher than the same quarter of 2020. However, the good balance between supply and demand previously mentioned, allowed us to translate some of that increase to our sales price while we keep doing efforts to also absorb part of that increase thru efficiencies in our processes as well.

Additionally, we have managed to keep our SG&A under control. For 1Q21 ours SG&A as percentage of sales was 8.5%, compared to the 10% recorded in the same period of 2020.

By keeping focus on the things we can control and by doing our best to manage external factors, we were able to achieve an EBITDA in 1Q21 of $2,913.4 million or 15.1% EBITDA margin. This compares to the $947.3 million and 6.0% margin reported for 1Q20.

We remain committed to our investors that we will keep a strong financial position while continuing to grow. As a result, we reported CAPEX of $555.7 million for the quarter which compares to the $292.7 million for the same period of 2020. This was achieved while generating a net cash position of $17,208.1 million by the end of 1Q21.

Unfortunately, the Covid-19 pandemic continues affecting not only México, but also economic conditions all around the world. Even if we did not observe material impacts in our operations or results during 1Q21, we are aware that conditions might change overnight. Therefore, we remain focused on reinforcing our internal capabilities, which will allow us to keep performing at our very best.”

Executive Summary

The following financial information is expressed in millions of nominal pesos, except for amounts per share and per ADR, with comparative figures for the same periods of 2020.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Net sales	19,357.6	15,738.4	3,619.2	23.0
Net sales in Mexico	14,629.4	11,067.6	3,561.8	32.2
Net sales in the U.S.	4,728.2	4,670.8	57.4	1.2

NET SALES BY SEGMENT
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Net sales	19,357.6	15,738.4	3,619.2	23.0
Poultry	16,983.9	14,162.8	2,821.1	19.9
Other	2,373.8	1,575.6	798.1	50.7

NET VOLUME SOLD BY SEGMENT

In tons			Change
	1Q21	1Q20	Volume	%
Total sales volume:	558,082	588,018	(29,935.7)	(5.1)
Poultry	416,978	457,167	(40,189.3)	(8.8)
Others	141,104	130,851	10,253.6	7.8

In 1Q21, the Company’s net sales totaled $19,357.6 million; $3,619.2 million or 23.0% more than $15,738.4 million reported in 1Q20. This was a result of better prices in our main business lines and higher volume sold in Others due to the integration of SASA.

In 1Q21, sales of our U.S. operations represented 24.4% of our total sales compared with 29.7% in 1Q20.

GROSS PROFIT
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Cost of sales	15,139.6	13,557.3	1,582.3	11.7
Gross profit	4,218.0	2,181.1	2,036.9	93.4
Gross margin	21.8%	13.9%	-	-

The cost of sales totaled $15,139.6 million, representing $1,582.3 million or 11.7% higher than $13,557.3 million reported in the same period of 2020. This increase was mainly driven higher raw material prices in dollar and in peso terms when compared to the same period of 2020.

The Company’s gross profit in 1Q21 was $4,218.0 million, with a gross margin of 21.8%. This result is higher when compared to a gross profit of $2,181.1 million and a gross margin of 13.9% reported in 1Q20.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)
In millions of pesos
	1Q21	1Q20	Change
	$	$	$	%
Total SG&A	1,637.3	1,572.7	64.6	4.1

Total SG&A expenses in 1Q21 were $1,637.3 million; $64.6 million or 4.1% more than the $1,572.7 million reported 1Q20. Total SG&A expenses, as a percentage of net sales, represent 8.5% in 1Q21 and 10.0% in 1Q20.

OTHER INCOME (EXPENSE), NET
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Other income (expense), net	(21.8)	(4.5)	(17.3)	384.4

Other income or other expenses include the sale of byproducts and unused assets. We register such sales as expenses when the sales price is below the book value of those assets.

OPERATING INCOME
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Operating income	2,559.0	604.0	1,955.0	323.7
Operating margin	13.2%	3.8%	-	-

Operating income in 1Q21 totaled $2,559.0 million with an operating margin of 13.2%; higher than the operating income of $604.0 million and 3.8% operating margin reported in 1Q20. The increase in operating income is mainly attributed to higher revenues in our main business lines.

NET FINANCIAL INCOME
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Net Financial Income (Expense)	319.6	2,426.5	(2,106.9)	(86.8)
Financial Income	374.4	2,483.3	(2,108.9)	(84.9)
Financial Expense	54.8	56.8	(2.0)	(3.5)

In 1Q21, the Company reported net financial income of $319.6 million, compared to net financial income of $2,426.5 million reported in the same period of 2020. This lower financial income was a result of the depreciation of the Mexican peso of around 2% from 4Q20 to 1Q21 vs the depreciation of around 26% from 4Q19 to 1Q20.

TAXES FOR THE PERIOD
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Total Taxes	803.9	860.3	(56.4)	(6.6)
Income tax	524.7	910.5	(385.8)	(42.4)
Deferred income tax	279.2	(50.2)	329.4	(656.1)

Total taxes for the 1Q21 were $803.9 million, compared to $860.3 million in the same period of 2020.

NET INCOME
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Net income	2,074.6	2,170.2	(95.5)	(4.4)
Net margin	10.7%	13.8%	-	-
Non-Controlling Interest income	(25.8)	3.5	(29.3)	n/a
Net controlling interest income	2,100.4	2,166.6	(66.3)	n/a
Basic and diluted income per share¹	3.50	3.61	(0.1)	n/a
Basic and diluted income per ADR²	42.02	43.34	(1.3)	n/a
Weighted average Shares outstanding³	599,835	599,843	-	-

¹ In pesos
² in pesos, an ADR is equal to twelve shares
³ In thousands of shares

The net income for 1Q21 was $2,074.6 million, representing a basic and diluted income of $3.50 pesos per share. This result compares to a net income of $2,170.1 million, which represented $3.61 pesos of basic and diluted income per share in 1Q20. Net margin for the 1Q21 was 10.7% compared to 13.8% reported in 1Q20.

EBITDA
In millions of pesos	1Q21	1Q20	Change
	$	$	$	%
Net controlling interest income	2,100.4	2,166.6	(66.3)	(3.1)
Income tax expense (benefit)	803.9	860.3	(56.4)	(6.6)
Result in associates	(25.8)	3.5	(29.3)	(830.2)
Net finance (income) expense	(319.6)	(2,426.5)	2,106.9	(86.8)
Depreciation and amortization	354.5	343.3	11.1	3.2
EBITDA	2,913.4	947.3	1,966.1	207.6
EBITDA Margin (%)	15.1%	6.0%	-	-
Net sales	19,357.6	15,738.4	3,619.2	23.0

EBITDA in 1Q21 reached $2,913.4 million, representing an EBITDA margin of 15.1%, compared to an EBITDA of $947.3 million in 1Q20 with an EBITDA margin of 6.0%.

BALANCE SHEET DATA

BALANCE SHEET DATA
In millions of pesos	Mar 31, 2021	Dec. 31, 2020	Change
	$	$	$		%
TOTAL ASSETS	59,877.1	58,475.0	1,402.1		2.4
Cash and cash equivalents	19,791.7	19,242.4	549.3		2.9
Accounts receivable	4,655.5	4,366.7	288.8		6.6
TOTAL LIABILITIES	13,612.9	14,548.2	(935.3	)	(6.4	)
Accounts payable	4,217.4	5,834.0	(1,616.6	)	(27.7	)
Short-term debt	1,119.0	1,251.7	(132.8	)	(10.6	)
Long-term debt	1,464.7	1,460.4	4.3		0.3
TOTAL STOCKHOLDERS’ EQUITY	46,264.3	43,926.8	2,337.5		5.3
Capital stock	1,174.2	1,174.3	(0.1	)	(0.0	)

Cash and equivalents as of March 31, 2021 totaled $19,791.7 million; $549.3 million or 2.9% higher than $19,242.4 million as of December 31, 2020.

Total debt as of March 31, 2021 totaled $2,582.6 million, compared to $2,712.1 million reported as of December 31, 2020.

Net cash as of March 31, 2021 was $17,209.1 million, compared to net cash of $16,530.2 million as of December 31, 2020.

CAPEX

CAPITAL EXPENDITURES
In millions of pesos	2021	2020	Change
	$	$	$	%
Capital Expenditures	555.7	292.7	263.0	89.9

Total CAPEX for the 1Q21 was $555.7 million, which was mainly allocated toward organic growth and productivity projects across all our facilities.

STOCK INFORMATION

As of March 31, 2021
Total Shares	600,000,000
Total free float	26.75%
Market cap (millions of pesos)	$40,824

SHARE PRICE
	Mexican Stock Exchange			The New York Stock Exchange
	Ticker Symbol: Bachoco			Ticker Symbol: IBA
	In nominal pesos per Share			In U.S. Dollar per ADR
Month	High	Low	Close	High	Low	Close
March	69.42	67.16	68.04	40.45	38.30	39.95
February	71.99	68.02	69.42	43.19	39.67	39.67
January	73.60	69.22	69.28	44.66	41.14	41.14
December	75.48	71.41	74.85	45.28	42.52	45.16
November	70.44	64.55	70.06	41.55	36.23	41.53
October	70.79	66.42	66.42	39.92	37.31	37.31

Source: Yahoo Finances

ANALYST COVERAGE

Institution	Analyst name	E-mail
ACTINVER	Enrique Mendoza Farias	emendoza@actinver.com.mx
BBVA BANCOMER	Pablo Abraham Peregrina	pablo.abraham@bbva.com
GBM	Miguel Tortolero	matortolero@gbm.com.mx
INTERCAM	Richard Horbach Martinez	rhorbach@intercam.com.mx
JP MORGAN	Ulises Argote	ulises.argote@jpmorgan.com
SANTANDER	Hector Maya López	hmmaya@santander.com.mx

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars (“USD”) using an exchange rate of $20.42 per USD $1.0, which corresponds to the rate at the close of March 31, 2021, according to Mexico’s National Bank.

Consolidated Statement of Financial Position
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Derivatives Position Report

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-Unaudited-

In U.S. Dollar

March 31,

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