Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX) Q4 2023 Earnings Call Transcript

Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX) Q4 2023 Earnings Call Transcript February 23, 2024

Fomento Económico Mexicano, S.A.B. de C.V. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello, and welcome to the FEMSA’s Fourth Quarter 2023 Results Conference Call. My name is Melisa and I will be your coordinator for today’s event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the presentation. [Operator Instructions] I’ll now turn the call over to Juan Fonseca, Head of Investor Relations. Please go ahead.

Juan Fonseca: Good morning everyone. Welcome to FEMSA’s fourth quarter and full year 2023 results conference call. Today, we are joined by José Antonio Fernández, FEMSA’s CEO and Executive Chairman of the Board; Paco Camacho, our Chief Corporate Officer; Eugenio Garza, our CFO; and Jorge Collazo, who Heads Coca-Cola FEMSA Investor Relations. The plan today is for José Antonio to open the conversation with some high level comments on the full year as well the senior organizational changes announced today. Then we’ll [ph] get a bit more into our strategic progress and business trends, followed by Eugenio, who will focus on the results. Finally, we will turn it back to José Antonio for some closing remarks and open the call to your questions. José Antonio, please go ahead.

José Antonio Fernández: Thank you, Juan. Good morning everyone. Let me begin by reflecting on a year that was like no other in recent memory, full of activity and new for the company. We kicked things off with the transformational announcement of FEMSA Forward, through which we focus on strategy — our strategy on our three core business verticals of retail, what we call also Proximity and Health, Coca-Cola FEMSA, and Digital. We then proceeded to execute on most of its related transactions in record time and with great success, divesting our investment in Heineken through two successful transactions as well as our minority stake in Jetro Restaurant Depot, merging employee solutions with BradyIFS, while reducing our capital exposure to that asset.

The effort is still ongoing as we are in the process of finalizing the remaining divestments. Furthermore, we are poised to begin deploying the capital allocation strategy announced last week that will allow us to increase our leverage towards our stated objective and to avoid capital idle — to avoid to have idle capital on our balance sheet. During 2023, we made significant progress executing on the long-range plan of all our business units and in lenders [ph] three strategic priorities of accelerating growth, going increasingly digital, and balancing our risk/return profile. We achieved these strong results by combining the right strategies with the hard work of our remarkable team. On that front, and in order to better leverage the FEMSA Forward strategy back in September, we made important changes to better align the corporate organization with our more focused structure built around our three core business verticals.

In that context, and given the strengthening of the management teams of the three verticals, today, we announced two important changes in our leadership team. Paco Camacho and Eugenio Garza both made the personal decision that this is the right time for them to finish their cycle at FEMSA and move on to seek new professional challenges with effect at the end of April. Their contributions to our company have been many and substantial, and we thank and appreciate them today, wishing them continued success in their future endeavors. Martin Arias, who many of you know from his 25 years of fruitful association with FEMSA will become CFO, working closely with Eugenio to ensure a seamless transition. And with that, let me turn it over to Paco.

Paco Camacho: Thank you, José Antonio. Good morning everyone. Let me begin with a couple of updates regarding FEMSA Forward. First, the Envoy-BradyIFS transaction announced in August successfully closed at the end of October and the new company is already operating as a single entity. Second, we have completed the process of carving out and transferring the distribution assets of OXXO and Coca-Cola FEMSA from Solistica to their respective operations. And they are now [Technical Difficulty] Solistica as well as other non-core operations as defined in FEMSA Forward. And finally, we have fine-tuned our capital allocation plans as we informed last week, putting us in a position to begin returning capital to shareholders as we begin to raise our leverage towards our stated objective of two times net debt-to-EBITDA ex-cost, which we expect to achieve within the — within two to three years.

Moving on to the results for the fourth quarter. Our numbers continued the positive trend seen during the first nine months of the year, fully consistent with our strategic priorities and making progress towards the targets set by each business unit long-range plan. Beginning with Proximity, like we did in our last call — last quarter — in our call last quarter, it’s helpful to talk for a minute about their own long-range plan and there are four priorities around which it is built; strengthening the core, developing new growth avenues, developing multiple successful formats, and growing the footprint beyond Mexico. Looking at OXXO’s fourth quarter results through this lens, we see they again made a strong progress, strengthen — with same-store sales growth of 8.5% against a double-digit comparison base.

This performance was again driven by a broad set of tailwinds, including stronger consumer demand for first, gathering and snacking occasions, solid commercial income dynamics, better segmentation at the store, and the rapid adoption of the spin Premia loyalty program. Continuing with the positive news of a stronger core, store growth was remarkable, with Mexico and LatAm adding 514 net new stores during the quarter and 1,408 during the past 12 months. Looking only at Mexico, we surpassed the 1,000 new store threshold for the first time since before the COVID pandemic, adding 1,087 net openings. Moving on to the long-range priority of growing beyond Mexico. During the quarter, Grupo Nós continues its solid advance with revenues increasing over 119% year-over-year and with OXXO’s footprint in Brazil more than doubling during the last 12 months, reaching 1,716 stores at the end of 2023.

[Indiscernible] on Proximity Americas, but along the priority of developing multiple successful formats, Bara grew revenues by 33.7% and reached a total of 359 stores at the end of the quarter. We will increasingly talk about other successful formats that are gathering momentum, such as our coffee drive-thrus, our specialized OXXO Smart stores for control environment, and our traditional trade initiatives. For its part, Proximity Europe achieving a strong operating results with substantial growth in a challenging macroeconomic environment. This was driven by higher sales in the food category and the favorable effect from vertical integration. Revenues increased by a strong 16.4%, generating operating leverage. As of the end of the year, Proximity Europe had 2,808 points of sales, a net increase of 42 units over the comparable period.

Our Health operations showed mixed performance trends and again reflected foreign exchange headwinds from a strong Mexican peso relative to local currencies in South America. In Colombia, we are gradually shifting our business towards more retail and less institutional exposure. Given the challenges the institutional health industry is — the current political environment. While in Mexico, we continue to see competitive retail activity across territories. In both cases, adjustments to our strategy are in progress, and we will keep you appraised. In line with our evolving strategy, during the quarter, our sales business continued to push the consolidated competitive position in retail across markets, increasing its store footprint to reach a total of 4,474 locations.

In fact, during 2023, our Health division added new locations across its territories a pace of approximately one per day. For its part, our Fuel business delivered a strong set of results with our dynamic corporate wholesale business continuing to outperform relative to retail. Comparable sales were robust with good contribution from traffic and ticket growth. Regarding Digital at FEMSA, the number of active users for spin by OXXO reached 6.9 million during the quarter, and active user for our Premia loyalty program reached 19.3 million. Importantly, approximately 31% of OXXO Mexico sales are now associated with the program. We continue to privilege the acquisition of higher-quality users while we make progress fine-tuning the use cases, value propositions, unit economics, and monetization strategies for each part of the ecosystem.

In terms of financial implications, during the quarter, we deployed around MXN1 billion on growing this business, roughly in line with the previous quarter as well as budget. Finally, Coca-Cola FEMSA delivered a remarkable set of results for the fourth quarter, driven by Mexico, Brazil, Colombia, and Guatemala, enabling cost to surpass 4 billion unit cases of non-alcoholic ready-to-drink beverages for the full year. And with that, let me turn it over to Eugenio.

Eugenio Garza: Thanks Paco. Good morning, everyone. As we continue to execute on our FEMSA Forward strategy, we’ve made some adjustments to the statements throughout the year to reflect the divestiture of our non-core businesses. During the fourth quarter, we recorded Alpunto and the third-party component of Solistica as discontinued operations. To maintain comparability, we modified our consolidated financial statements for the fourth quarter of 2022 to reflect this change. Let’s begin with FEMSA’s quarterly consolidated results. During the fourth quarter, total revenues increased 4.6% and EBITDA rose 3.6% compared to the fourth quarter of 2022. Net consolidated income decreased 20.7% and stood at MXN6.3 billion, resulting from higher gross profit and lower net interest expenses during the quarter.

This was offset by a non-cash foreign exchange loss of MXN6.3 billion related to our U.S. dollar-denominated cash position and impacted by the depreciation of the Mexican peso and a MXN3.2 billion net loss from discontinued operations, mostly reflecting the accounting remeasurement from historical cost to fair value of FEMSA’s investment in Solistica and Alpunto net of impairments. Shifting gears to our business unit results and starting with Proximity Americas. During the fourth quarter, we incorporated 514 stores, bringing our total to 1,408 new stores for 2024, which includes 1,087 new stores in Mexico and 321 in South America. This robust growth has propelled us beyond our annual growth target, renewing our confidence that our growth runway remains long for OXXO across all markets, and the opportunity for our multi-format strategy is equally compelling.

OXXO same-store sales increased 8.5% in the fourth quarter, cycling strong double-digit growth from the same quarter of last year. This result was led by a 6.3% increase in average customer ticket and a 2.1% increase in traffic as the trend gradually reverts to more sustainable levels after eight consecutive quarters of double-digit growth. Gross margin grew 17.2%, an expansion of 120 basis points, led by healthy commercial income dynamics and higher income from financial services. Income from operations rose by only 1%, reflecting an operating margin of 11.2%, a contraction of 150 basis points, driven mainly by higher labor expenses in Mexico, including adjustments made ahead of further regulatory changes expected during 2024. Moving on to Proximity Europe, total revenues grew by 9.5% in local currency, resulting in 16.4% growth in peso terms, boosted by the food category across all units and the positive effect of vertical integration, particularly through the B2B pretzel business.

Gross margin stood at 44.9%, while operating margin expanded by 180 basis points to reach 5.2%, reflecting the same drivers that supported revenue growth as well as higher promotional income. Turning to FEMSA Health operations. We expanded by 127 net new drug store additions during the fourth quarter to reach a total of 4,474 units across our territories in 2023. Total revenues increased 2.6%, while same-store sales grew 5.1% in Mexican pesos. On a currency-neutral basis, revenues and same-store sales increased by 9% and 3.1%, respectively, driven by a positive performance across most of our territories, which was partially offset by a challenging macroeconomic environment in Colombia and Ecuador. Beyond the top line, however, gross margin decreased 110 basis points and operating margin was down 240 basis points, largely reflecting a deteriorating environment in the Colombian institutional business, where we took a charge of MXN527 billion for uncollectible accounts.

As a result of the structural headwinds, we are actively evolving our Colombian operation to rely more on a dynamic and fast-growing retail components and less on the structurally complex institutional operations. Moving on to VAS. Same-station sales increased 4.8% and total revenue grew by 9% as we continue to develop our corporate business. During the quarter, gross margin was 13.4% and operating margin was 4.6%, reflecting tight expense control and operational efficiencies. Finally, moving on to Coca-Cola FEMSA that again delivered an outstanding set of results in the fourth quarter. Total volume increased 6.1%, driven by growth across most of its territories. Total revenues grew 8.1% and operating income grew 7.4%, while operating margin was 14.6%.

On a more strategic note, they did reach a milestone in their digital transformation journey, reaching more than 1.1 million monthly active users through the Juntos Plus platform with more than $2.5 billion for the year. You can listen to the replay of the conference call held yesterday in their website. Now, let me turn it back to José Antonio for some closing remarks. Go ahead, José Antonio.

José Antonio Fernández: Thank you, Eugenio. Before we close, let me talk a little about our progress on our sustainability efforts during 2023 as we made progress on several fronts, as an example, in recognition of our ongoing efforts to advance our sustainability agenda, FEMSA was included in the Standard & Poor’s Global Sustainability Yearbook for the first time in 2024. We were [Indiscernible] for continuous improvement in water management, resource efficiency, packaging circularity, and business integrity metrics. The Yearbook recognizes corporations that serve as a reference in global sustainability standards. On the governance front, we continue to evolve the composition of our Board of Directors with the nomination this year of two new Independent Directors; [Indiscernible].

They are remarkable executives, whose experience, acumen, and expertise will surely benefit our company for years to come. No recap of 2023 could be completed without mentioning our great friend Daniel Rodriguez. For all the strategic success and operational achievements we have talked about today, our hearts are heavy and our mood is tempered by Daniel’s passing. Daniel was key in defining the strategy and setting these positive trends in motion, and we hope we are making him proud today. As we look ahead, we are fortunate to have a broad set of opportunities to continue growing in every one of our core verticals. There is no doubt that the year that begins will bring some headwinds such as higher labor costs in Mexico, but also the tailwinds of higher economic activity from an electoral period in the short-term and from encouraging macro trends like nearshoring and — in the medium and long-term.

Across our markets, we will again navigate a mix of challenges and opportunities. And I have no doubt that we will again find a way to thrive and create value for all our stakeholders. We start 2024 keeping our eye on the ball as we carry good momentum into what will surely be another interesting year. All our business units are well-positioned for continued growth. I am particularly excited to see the many ways in which we will continue to apply our growing data analytics and AI capabilities to drive better performance and incremental growth across our three core verticals. We are just getting started. Finally, I want to take this opportunity to thank our entire team for a job well done in 2023 and to thank all of you joining us today for our continued support and interest in our company.

And with that, we are ready to open the call for questions.

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Q&A Session

Operator: Thank you very much. [Operator Instructions] Our first question comes from Ben Theurer from Barclays. Please go ahead.

Ben Theurer: Yes, good morning everyone and thanks for taking my question. Just wanted to follow-up a little bit on the performance at OXXO, the same-store sales composition in particular. Could you talk a little bit about the deceleration sequentially that you saw in store traffic? Because obviously, we had a fairly strong a fairly strong first nine months period with same-store sales growing somewhere in the mid-single-digits on the — side. But now it kind of came down and even with the base comparison that wasn’t too high. So, any color you can share on that, that would be much appreciated. Thank you.

Eugenio Garza: Sure, Ben. I think it has to do mostly with the fact that we had a very strong fourth quarter last year related to the World Cup and other events coming due. So, there’s a fair bit of that. So that — call it, excess traffic from last year did not repeat. Having said that, the underlying trend in traffic, if you see the services category, that is coming up significantly. So, it’s a little bit of the mix of both. And unfortunately, the average ticket continues to maintain at a much higher level than it did pre-pandemic given the change in customer taste. And I think that combination is what I think drove same-store sales to their fantastic performance throughout the year. But specifically, fourth quarter has to do with lapping of the World Cup and a change in the composition of that traffic.

Paco Camacho: And also just to add a couple of things and provide some more color on that. Structurally, the performance of the stores is very strong, and we saw very good performance across segments and across categories. And obviously, that also generates a strong performance in the traffic. So, we feel confident about the structural, the traffic trend being strong and as we enter into 2024.

Juan Fonseca: Yes. I would just add, Ben, this is Juan. To be honest, I expected this to happen back in April. You remember at the call back in April, where I was already guiding people to not put a double-digit same-store sales number in their model. And then I was wrong for three quarters, but eventually, the math kind of catches up with you. I think you’re also looking at what was a very long recovery post-COVID, right? I mean the traffic fell off a cliff in 2020, and it’s been coming back. And there’s a lot of — as Paco was saying, I mean, segmentation at the stores and the drivers for growth are very much in place. But I think the mix that we see today is a more normal mix, quite frankly, and more — looking forward, I think our mix is going to look more like what we reported today than the 6%, 7%, 8% that we were showing three or six months ago.

Ben Theurer: Thank you.

Operator: Thank you. Our next question is on Ricardo Alves with Morgan Stanley. Please go ahead.

Ricardo Alves: Hello everybody. Thanks for the call. Question on the senior management change. If you could add more details, for instance, on the timing, particularly now in the middle of the FEMSA Forward just to make sure that everything is aligned with the Board and so forth? We also noticed that the part of the release, you mentioned that Eugenio will launch the implementation of the capital allocation elements. Can you tell us what that means exactly? Is that related to the buyback specific? And then it also states that Eugenio will remain as an adviser. And if that would be related to the second stage of the Envoy that we discussed at length last year or maybe new ventures in the U.S.? So, curious if you can elaborate to the extent possible, a little bit more on the CFO and the — and Paco move as well, evidently very relevant for today?

And a follow-up to that question would be on the shareholder return and on the buyback point that I mentioned, the doubling of the authorization, the $2 billion or whatever the number is, is pretty significant. But — we all know that there has been very limited activity to no activity depending on the timeframe. So, now that the announcement is behind us, can you share with us the key hurdles or the accounting flexibility that you now seem to have overcome so that you are now really confident that you’re going to be able to be active on the buybacks. Is there a timing for us to be expecting more activity there? So, just a little bit more granularity on the buyback component. Sorry for the long question.

José Antonio Fernández: Well, I will start with the first part of the question, and we’ll let Eugenio and Paco to explain the second part. But on the first part, we have agreed with Paco and Eugenio is that they will stay with us helping until the end of April. By then — and starting next week, Martin Arias is already fully involved — going to start fully involved and the transition of Eugenio and Martin will go very smoothly. At the same time, Eugenio, he offered us to continue as an adviser per project. And yes, there could be some projects that we could do of investments — or new investments that we could do and obviously, to continue putting an eye and advising us on all the capital allocation strategy that we have designed and have presented to you recently. On the rest, I will ask Eugenio to explain.

Eugenio Garza: Sure Ricardo. Yes, definitely, what I’m going to be more focused on over the next couple of months during the transition with Martin is on the implementation of the capital return portion of the capital allocation program we announced last week. So, it does have to do with share repurchases and continually monitoring the investments, both in organic, inorganic investments as we aim to reach that two times net debt-to-EBITDA over the next few months. So, to your question with regards to the timing of the share repurchases, with the announcement behind us, clearly now we will start to have an open to start to use that more heavily. What we will be asking the Shareholder Meeting in March is to increase the capacity that we currently have.

But again, we have capacity currently in place to start to operate as soon as next week. So, we will be implementing that capital return strategy, as we mentioned in the release last week in a way that maximizes per share value from an intrinsic perspective in the long-term. So, that will be a combination of both share buybacks and extraordinary dividends. As you saw, we already started with our first one, and there will be additional ones to come. If indeed, we realize that through the operating environment, we’re not able to reach the two times net debt-to-EBITDA on our own. So, those will be the levers that we will be pulling. Again, with me at the helm for the next couple of months and then with Martin and the rest of the team helping him going forward.

Juan Fonseca: I would like to add, Ricardo, this is Juan. Since we did not have a call dedicated to the capital allocation release, so the fact that we’re all here today, I understand that there may be some questions on — yours is the first one on continuity, right? And so I would like to ensure that the strategy that was communicated last week is fully in place, that the two times net debt-to-EBITDA target is fully in place and there will be no deviation from that. So, I just wanted to put that out there because I know that the concern is going to be among investors.

José Antonio Fernández: Yes.

Ricardo Alves: That’s helpful, gentlemen. Thank you so much.

Juan Fonseca: Thanks Ricardo.

José Antonio Fernández: Thanks.

Operator: Thank you. Our next question is from Álvaro García of BTG Pactual. Please go ahead.

Álvaro García: Hi gentlemen. Thanks for the call. Eugenio, Paco all of that going forward. My question is on labor costs in Mexico. I know that FEMSA has a philosophy of paying more than The Street, paying more than competitors or similar outlets, and that’s very much true of OXXO. And I’m just curious where we are in that process of upping pay for your employee base at OXXO? How much more difficult has it been to get that premium and what’s your outlook for labor cost into 2024? Thank you.

Paco Camacho: Hi Álvaro, this is Paco. Good to hear from you. I will let start and then I will let the team provide further perspective. But I guess that what we need to keep in mind when it comes to cost management, particularly in OXXO, understanding that the labor costs — specifically the labor cost during the last year was, I would say, a special situation versus other years because of its magnitude. But the reality what we need to keep in mind is that OXXO is extremely good at working consistently on making our operations more efficient. So, the team has been focused on making sure that all the verticals among the possibilities that they usually explore as part of the way they do their operations of the stores, continue to progress towards further efficiencies.

And I guess that, that has to do with store management, that has to do with headcount, that has to do with how we look into the specific costs in the stores. So, this is just to reassure you that structurally speaking, and the way we approach this in the stores hasn’t changed. We will continue to do so. And evidently, every time something like this comes, the teams double the efforts on maximizing the efficiency. But for 2024, we have included the increases in the plants and we are confident that we can deliver on those plans as we enter the year. Eugenio, do you want to add something on that?

Juan Fonseca: I would add one thing, Álvaro, this is Juan. Just because we — when you look at the numbers and you look at the OXXO P&L, we’re making some comments about how the operating margin was impacted by, among other things, but largely by the labor cost situation. And so in terms of 2024, I just want to put out there — hate to call it guidance, but our expectation is that operating margins for the year will be flat, right? That’s kind of our base case. So, I think the year is going to start a little bit softer, and it’s going to gather strength as the year goes by. But for the full 2024, our expectation is for operating margins to be flat for OXXO Mexico. And I think that’s an important data point.

Álvaro García: Okay, great. Thank you very much.

Juan Fonseca: Gracias Álvaro.

José Antonio Fernández: Gracias Álvaro.

Operator: Thank you. Our next question is from Héctor Maya of Scotiabank. Please go ahead.

Héctor Maya: Thank you very much for taking my questions. So, I just wanted to know about your update of the FEMSA Forward plan. We saw that the execution and divestments have come ahead of time and it was succeeding expectations. So, just wanted to understand why you considered it was necessary to expand the timeline window for cash deployment by an additional year potentially? And would that be because maybe M&A opportunity to take longer to appear? Or is there a concern for either the economic or political environment in your operations that drove the decision to keep a relevant cash position for a little longer?

Eugenio Garza: Hi Héctor. Thanks for your question, it’s Eugenio here. Look, really, nothing has changed from what we said last year and we continue to reiterate it. We are going to get to two times net debt-to-EBITDA. We can get there in several ways. One is through special dividends. The other one is through share repurchases and the other one will be through organic and inorganic investments. At this point, yes, we’re sitting on a pile of cash that’s accumulated at a higher pace than we expected because of the success that we’ve had with the divestiture so far. There will be more of that cash both from the remaining sales of the remaining assets as well as the Jetro stake, which we sold in installments and the operations will also be generating cash.

So, we are, I mean, painfully aware of the problem holding too much cash. Having said that, we want to deploy it in a smart way that maximizes long-term intrinsic per share value. So, I think still within the range of the same two to three years, we will get to the two times net debt-to-EBITDA. It makes us, to be honest, feel a little bit more comfortable holding on to the cash right now at 5% interest rates that we’re investing it in rather than where it was two years ago. So, we’re being patient as opportunities arise. But again, even if we do see inorganic opportunities, we’ve stated there will be in the core business verticals that we identified on the FEMSA Forward, and they will be financially-accretive to long-term intrinsic per share value.

So, we want to maximize that flexibility that we have to invest across our businesses and in the best investment that we have, which is our own share and get to that two times net debt-to-EBITDA in due course.

Héctor Maya: Thank you. That’s very clear. And also the conversation around the hard discount category and private label has been very hot right now, very active. So, I just also wanted to understand if we could expect your strategy with Bara to become more aggressive in the future? And how relevant could private label become for your overall strategy and maybe even for OXXO?

Paco Camacho: So, Héctor, just to answer, this is Paco. Just to answer that very quickly and continue with the questions from the rest of the attendance. Look, as you know, and as we highlighted in the opening remarks, I mean, clearly, one of the strategies that we are following in Proximity, and we have stated before is performance. Bara is an important component of the multi-format vertical. Bara, we reported, has had very strong goals in 2023 and our intention is to continue strengthening that business in 2024 and in the years to come. Private label is a very important part of the question of that business. It has been performing really well. So, what we are doing and what we have explained we’re intending to do in that business has nothing to do with the recent announcements on that part — in that segment of the retail.

But basically just following the strategy we have highlighted before. And to your point, I mean, clearly, private label is an important component. We are doing very well in that segment of the business in the results we posted and our intention is to continue doing the same in the years to come.

Eugenio Garza: And again, with regards to your specific question on Bara, I mean–

Héctor Maya: Thank you very much.

Eugenio Garza: Go ahead.

Héctor Maya: I’m sorry.

Eugenio Garza: No, I was just going to say on Bara, we’re happy that the market is recognizing the value in hard discount, there’s a long, long way in that format ahead. And again, we’re happy that now the market has another view into how that business is performing, and that will continue to be friendly competitors in the market.

José Antonio Fernández: Let me just add. I don’t know if you are aware, we hired a new Director for that area [Indiscernible] who’s an expert on this kind of multi-format and hard discount stores. And he is — he has been here for the last three or four months already, and he is completely convinced that the potential of our Bara project is now ready to jump and to grow fast with — under him. So, we are really looking for how to develop and to grow all over with Bara as we speak.

Héctor Maya: Excellent. Very, very clear. Thank you very much. Thank you.