Industrias Bachoco B de C : BACHOCO ANNOUNCES FIRST QUARTER 2023 RESULTS

BACHOCO ANNOUNCES FIRST QUARTER 2023 RESULTS

Celaya, Guanajuato, Mexico - May 2nd, 2023

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 ("1Q23") ending March 31, 2023. 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 2023

• Net sales decreased 4.5% in 1Q23 vs 1Q22.
• EBITDA margin was 8.7% in 1Q23 vs 14.4% in 1Q22.
• Earnings per basic and diluted share were $0.79 in 1Q23 vs $3.60 in 1Q22.

CEO COMMENTS

Mr. Ernesto Salmon Chief Executive Officer of Bachoco, stated:

"We observed a challenging first quarter, mainly in our operation in the United States, where chicken prices in the commodity market had a decrease after that some products reported high levels for grand part of 2022.

On the other hand, inflationary effects in both Mexico and the US continued to have a negative impact on our costs and expenses.

At the beginning of the year, we observed a slowdown in the demand in the market of the both geographies in which we participate. This caused our sales volume to adjust in all our business lines vs. 1Q22.

As a result, in 1Q23 we reported an operating profit of $1,645.4 million, 47.6% lower than the $3,142.2 million reached in the same period of 2022. With operating margins of 7.1% and 12.9% respectively. In terms of EBITDA margin, this placed us in 8.7% for 1Q23 vs. 14.4% for 1Q22.

Even though higher prices in raw materials have increased our working capital needs, our financial position remains solid, and we have maintained our net cash. The data reported at the end of 1Q23 was $14,563.3 million. This has allowed us not only to face the challenges of our industry but also to continue with our growth strategy. At the end of 1Q23 our level of capital investments was placed at $1,009.9 million, an increase of 10.3% compared to the same period of 2022. These investments were focused on inorganic growth initiatives, as well as on productivity of our facilities"

Contact Information

[e-mail] / T. [phone]

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 2022.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos		1Q23		1Q22		Change
		$		$		$		%
	Net sales		23,272.2			24,367.0			(1,094.8)		(4.5)
	Net sales in Mexico		18,866.5			18,096.4			770.0		4.3
	Net sales in the U.S.		4,405.7			6,270.6			(1,864.8)		(29.7)

NET SALES BY SEGMENT

In millions of pesos			1Q23		1Q22		Change
		$		$		$		%
	Net sales			23,272.2			24,367.0			(1,094.8)		(4.5)
	Poultry		19,639.6			20,876.2			(1,236.6)		(5.9)
	Other		3,632.6			3,490.8			141.8		4.1

NET VOLUME SOLD BY SEGMENT

In tons				Change
	1Q23	1Q22	Volume	%
Total sales volume:	571,069	596,544	(25,474.6)		(4.3)
Poultry	431,221	441,036	(9,814.4)		(2.2)
Others	139,848	155,508	(15,660.2)		(10.1)

In 1Q23, the Company's net sales totaled $23,272.2 million; $1,094.8 million or 4.5% less than $24,367.0 million reported in 1Q22. 96% of this decrease was due to the effect of lower volume sold and the remaining 4% to lower prices.

In 1Q23, sales from our operations in the US represented 18.9% of our total sales vs 25.7% in 1Q22. This decrease is mainly related to the drop in commodity market prices in that geography and partially impacted by the appreciation of the Mexican peso against the US dollar.

GROSS PROFIT

In millions of pesos			1Q23		1Q22			Change
		$		$		$	%
	Cost of sales			19,548.4			19,240.5			307.9		1.6
	Gross profit		3,723.8			5,126.5			(1,402.7)		(27.4)
	Gross margin		16.0%			21.0%			-		-

The cost of sales totaled $19,548.4 million, representing $307.9 million or 1.6% higher than $19,240.5 million reported in the same period of 2022. This increase was mainly due to a higher unit cost in our main lines of business.

The Company's gross profit in 1Q23 was $3,723.8 million, 27.4% less than the gross profit of $5,126.5 million in 1Q22; with a gross margin of 16.0% reported in 1Q23 vs 21.0% from the 1Q22.

2

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")

In millions of pesos
		1Q23	1Q22		Change
	$	$	$	%
Total SG&A		2,110.5	1,999.1	111.4		5.6

Total SG&A expenses in 1Q23 were $2,110.5 million; $111.4 million or 5.6% more than the $1,999.1 million reported 1Q22. Total SG&A expenses, as a percentage of net sales, represent 9.1% in 1Q23 and 8.2% in 1Q22.

OTHER INCOME (EXPENSE), NET

In millions of pesos		1Q23		1Q22			Change
		$		$		$	%
	Other income (expense), net		32.1			14.8			17.3		116.4

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			1Q23		1Q22			Change
		$		$		$	%
	Operating income			1,645.4			3,142.2			(1,496.8)		(47.6)
	Operating margin		7.1%			12.9%			-		-

Operating income in 1Q23 totaled $1,645.4 million, $1,496.8 less comparing which compares to the operating income of $3,142.2 million and 12.9% operating margin reported in 1Q22. This represents an operating margin of 7.1% for 1Q23 compared to 12.9% for the same period in 2022. The decrease in operating income is attributed to lower prices, mainly in the US, and lower volume sold in our main business lines; as well as higher operating expenses.

NET FINANCIAL INCOME

In millions of pesos			1Q23		1Q22			Change
		$		$		$	%
	Net Financial Income (Expense)			(1,048.9)			(235.7)			(813.2)		345.0
	Financial Income		385.8			(101.2)			486.9		(481.3)
	Financial Expense		1,434.6			134.6			1,300.1		966.1

In 1Q23, the Company reported net financial expenses of $1,048.9 million, compared to net financial expenses of $235.7 million reported in the same period of 2022. Of the $1,434.6 million reported in financial expenses, $1,170.8 million correspond to foreign exchange results.

TAXES FOR THE PERIOD

In millions of pesos			1Q23	1Q22		Change
	$	$	$	%
Total Taxes			156.2	778.4	(622.2)		(79.9)
Income tax		432.2	604.5	(172.4)		(28.5)
Deferred income tax		(275.9)	173.9	(449.8)		(258.7)

Total taxes for the 1Q23 were $156.2 million, compared to $778.4 million in the same period of 2022. The decrease was due to a lower result before taxes for 1Q23.

3

NET CONTROLLING INTEREST

INCOME

In millions of pesos			1Q23		1Q22		Change
		$		$		$		%
	Net income			440.3			2,128.0			(1,687.8)		(79.3)
	Net margin		1.9%			8.7%			-		-
	Non-Controlling Interest income		(36.2)			(28.6)			(7.6)		n/a
	Net controlling interest income		476.4			2,156.6			(1,680.2)		(77.9)
	Basic and diluted income per share1			0.79			3.60			(2.80)		n/a
	Basic and diluted income per ADR2			9.54			43.18			(33.6)		n/a
	Weighted average Shares outstanding3			599,380			599,380			-		-

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

The net controlling interest income 1Q23 was $476.4 million, representing a basic and diluted income of $0.79 pesos per share. This result compares to a net controlling interest income of $2,156.6 million, which represented $3.60 pesos of basic and diluted income per share in 1Q22. This decrease is mainly due to lower operating results and higher financial expenses.

EBITDA

In millions of pesos		1Q23	1Q22	Change
	$	$	$	%
Net controlling interest income		476.4	2,156.6	(1,680.2)	(77.9)
Income tax expense (benefit)		156.2	778.4	(622.2)	(79.9)
Result in associates		(36.2)	(28.6)	(7.6)	26.5
Net finance (income) expense		1,048.9	235.7	813.2	345.0
Depreciation and amortization		387.9	374.9	13.1	3.5
EBITDA		2,033.3	3,517.0	(1,483.7)	(42.2)
EBITDA Margin (%)		8.7%	14.4%	-	-
Net sales		23,272.2	24,367.0	(1,094.8)	(4.5)

EBITDA in 1Q23 reached $2,033.3 million, representing an EBITDA margin of 8.7%, compared to an EBITDA of $3,517.0 million in 1Q22 with an EBITDA margin of 14.4%.

BALANCE SHEET DATA

BALANCE SHEET DATA

In millions of pesos		Mar 31, 2023	Dec. 31, 2022	Change
	$	$	$	%
TOTAL ASSETS		71,164.6	72,568.8	(1,404.2)	(1.9)
Cash and cash equivalents		18,995.3	20,080.9	(1,085.5)	(5.4)
Accounts receivable		5,808.3	5,954.5	(146.2)	(2.5)
TOTAL LIABILITIES		18,186.5	19,667.5	(1,481.0)	(7.5)
Accounts payable		8,244.4	9,082.4	(838.1)	(9.2)
Short-term debt		1,412.0	1,181.5	230.5	19.5
Long-term debt		3,020.1	3,020.1	-	-
TOTAL STOCKHOLDERS' EQUITY		52,978.1	52,901.3	76.8	0.1
Capital stock		1,174.4	1,174.4	(0.1)	(0.0)

Cash and equivalents as of March 31, 2023 totaled $18,995.3 million vs $20,080.9 million as of December 31, 2022.

4

Total debt as of March 31, 2023 totaled $4,432.1 million, compared to $4,192.0 million reported as of December 31, 2022.

Net cash as of March 31, 2022 was $14,563.3 million, compared to net cash of $15,888.6 million as of December 31, 2022.

CAPEX

CAPITAL EXPENDITURES

In millions of pesos		1Q23	1Q22		Change
	$	$	$	%
Capital Expenditures		1,009.9	915.2	94.7	10.3

Capital investments for the first quarter of 2023 totaled $1,009.9 million vs. $915.2 million for the same period in 2022. This was primarily allocated to organic growth and productivity projects.

STOCK INFORMATION

	As of March 31, 2023
Total Shares	600,000,000
Total free float	2.5%
Market cap (millions of pesos)	$58,374

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		97.29	81.66
	February		82.50	81.66
	January		84.11	81.71
	December		84.51	81.66
	November		86.31	80.84
	October		81.40	77.77

97.29

82.28

81.82

84.51

82.64

80.91

66.25

53.74

53.54

51.03

53.44

49.06

53.81

51.22

50.48

48.97

49.17

46.25

66.25

53.30

52.23

50.99

51.11

49.06

Source: Yahoo Finances
ANALYST COVERAGE
Institution	Analyst name	E-mail
GBM	Luis Rodrigo Willard Alonso	[e-mail]

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $18.02 per USD $1.0, which corresponds to the rate at the close of March 31, 2023, according to Mexico's National Bank.

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

5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

First Quarter Results, ended March 31st:
		In U.S. Dollar	March 31,	December 31*,
In million pesos		2023		2023		2022*
TOTAL ASSETS	$	3,949.2		71,164.6	72,568.8
Total current assets		2,148.7		38,718.7	40,033.8
Cash and cash equivalents		1,054.1		18,995.3	20,080.9
Total accounts receivable		322.3	5,808.3	5,954.5
Inventories		644.0	11,604.2	11,592.0
Other current assets		128.2	2,310.8	2,406.3
Total non current assets		1,800.6		32,445.9	32,535.1
Net property, plant and equipment		1,386.7		24,988.9	24,578.5
Other non current Assets		413.8	7,457.0	7,956.6
TOTAL LIABILITIES	$	1,009.2		18,186.5		19,667.5
Total current liabilities		554.4		9,989.5	10,667.3
Notes payable to banks		78.4		1,412.0	1,181.5
Accounts payable		457.5	8,244.4	9,082.4
Other taxes payable and other accruals		18.5	333.1	403.3
Total long-term liabilities		454.9		8,197.0	9,000.2
Long-term debt		167.60		3,020.1	3,010.5
Other non current liabilities		54.7	986.2	1,106.3
Deferred income taxes		232.6	4,190.7	4,883.5
TOTAL STOCKHOLDERS' EQUITY	$	2,940.0		52,978.1		52,901.3
Capital stock		65.2	1,174.3	1,174.4
Commission in shares issued		23.0	414.1	414.1
Retained earnings		2,808.6		50,610.3	50,158.6
Others accounts		22.7	408.9	744.7
Non controlling interest		20.6	370.5	409.5
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,949.2		71,164.6	72,568.8

*Audited

6

CONSOLIDATED STATEMENT OF INCOME

First Quarter Results, ended March 31st:

-Unaudited-

In millions pesos			2023		2023			2022
Net sales	$	1,291.5		23,272.2		24,367.0
Cost of sales			1,084.8		19,548.4		19,240.5
Gross profit			206.6		3,723.8		5,126.5
SG&A			117.1		2,110.5		1,999.1
Other income (expenses), net			1.8		32.1			14.8
Operating income			91.3		1,645.4		3,142.2
Net finance income			(58.2)	(1,048.9)		(235.7)
Income tax			8.7		156.2			778.4
Net Income	$	24.4		440.3			2,128.0
Non-controlling interest			(2.01)	(36.2)		(28.6)
Net controlling interest profit			26.44		476.4			2,156.6
Basic and diluted earnings per share			0.04		0.79			3.60
Basic and diluted earnings per ADR			0.53		9.54			43.18
Weighted average Shares outstanding1			599,380		599,380		599,380
EBITDA Result	$	112.8		2,033.3		3,517.0
Gross margin			16.0%		16.0%		21.0%
Operating margin			7.1%	7.1%		12.9%
Net margin			2.0%	1.9%		8.7%
EBITDA margin			8.7%	8.7%		14.4%

1 In thousands

7

CONSOLIDATED STATEMENT OF CASH FLOWS

In million of pesos -Unaudited-

	U.S. Dollar	March 31,
			2022			2023			2022
NET MAJORITY INCOME BEFORE INCOME TAX		$	33.1			596.5		2,906.5
ITEMS RELATING TO INVESTING ACTIVITIES:			20.8			373.9		385.9
Depreciation and others			26.2			472.5		547.3
Income (loss) on sale of plant and equipment			1.3			23.3		17.4
Other Items			(6.8)		(121.9)		(178.8)
NET CASH GENERATED FROM NET INCOME BEFORE TAXES			53.9			970.4		3,292.4
CASH GENERATED OR USED IN THE OPERATION:			(44.9)		(809.2)		(1,416.5)
Decrease (increase) in accounts receivable			13.4			242.0		(349.2)
Decrease (increase) in inventories			3.1			56.7		(1,024.1)
Increase (decrease) in accounts payable			(19.4)		(350.3)		(2,019.2)
Other Items			(42.0)		(757.5)		1,975.9
NET CASH FLOW FROM OPERATING ACTIVITIES			8.9			161.3		1,875.9
NET CASH FLOW FROM INVESTING ACTIVITIES			(31.9)		(575.3)		(1,621.4)
Acquisition of property, plant and equipment			(54.7)		(986.5)		(915.2)
Proceeds from sales of property plant and equipment			0.6			11.7		46.0
Other Items			22.2			399.6		(752.1)
CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN
FINANCING ACTIVITIES			(23.0)		(414.0)		254.5
Net cash provided by financing activities:			(27.7)		(498.7)		(847.6)
Proceeds from loans			16.6			300.0		77.9
Principal payments on loans			(3.3)		(59.9)		-
Dividends paid			-			-			-
Other items			(41.0)		(738.8)		(925.5)
Net increase (decrease) in cash and equivalents			(50.7)		(912.7)		(593.1)
Cash and investments at the beginning of year	$	1,112.6			20,049.6			20,707.1
CASH AND INVESTMENTS AT END OF PERIOD	$	1,062.0			19,136.9			20,114.0

8

DERIVATIVES POSITION REPORT

First Quarter 2023

Thousands of Mexican Pesos, as of March 31, 2023

TYPE OF FINANCIAL	OBJECTIVE	NOTIONAL		VALUE OF THE RELATED COMMODITY			REASONABLE VALUE	AMOUNTS DUE	GUARANTIES
INSTRUMENT					1Q-2023			4Q-2022			1Q-2023	4Q-2022	BY YEAR	REQUIRED
Forward Vanilla y KO																		88% in 2023
Hedge	$	144,813	$	18.02			$	19.51			$	-271,562	$ -136,757	and 12% in
Fwd
																	2024
						CORN				CORN
					In USD per Bushel		In USD per Bushel
					month			price		month			price
					May-23		$	6.605		Mar-23		$	6.785
					Jul-23		$	6.360		May-23		$	6.780
					Sep-23		$	5.773		Jul-23		$	6.718
					Dec-23		$	5.665		Sep-23		$	6.270
										Dec-23		$	6.108
					SOYBEAN MEAL		SOYBEAN MEAL
					In USD per ton		In USD per ton
					month			price		month			price
Futures for corn,					May-23		$	466.0		Mar-23		$	471.0
soybean meal, soybean	Hedge	$	855,601		Jul-23		$	461.3		May-23		$	461.0	$	27,566	$	16,178	100% in 2023
oil and natural gas					Aug-23		$	450.2		Jul-23		$	454.3
					Sep-23		$	435.7		Aug-23		$	443.1
					Oct-23		$	423.2		Sep-23		$	428.2
					Dec-23		$	419.8		Oct-23		$	413.6
										Dec-23		$	411.6
					SOYBEAN OIL		SOYBEAN OIL						The deals
					In US cents per pound		In US cents per pound						consider the
					Month			Price		Month			Price						possibility of
					Sep-23		$	54.78		Mar-23		$	64.07						margin calls but
					May-23		$	55.49		May-23		$	63.94
													not another kind
					Jul-23		$	55.62		Jul-23		$	63.56
													of guarantee
					Aug-23		$	55.24
						CORN				CORN
					In USD per Bushel		In USD per Bushel
					month			price		month			price
					May-23		$	6.605		Mar-23		$	6.785					91% in 2023
Options of Corn	Hedge	$	833,520		Jul-23		$	6.360		May-23		$	6.780	-$	10,105	$	25,296
				and 9% in 2024
					Sep-23		$	5.773		Jul-23		$	6.718
					Dec-23		$	5.665		Sep-23		$	6.270
					Mar-24		$	5.740		Dec-23		$	6.108
										Mar-24		$	6.180
					SOYBEAN MEAL		SOYBEAN MEAL
					In USD per ton		In USD per ton
					month			price		month			price
					May-23		$	466.0		Mar-23		$	471.0
					Jul-23		$	461.3		May-23		$	461.0					83% in 2023
					Aug-23		$	450.2		Jul-23		$	454.3
Options of soybean meal	Hedge	$	929,763					$	81,921	$	109,976	and 17% in
	Sep-23		$	435.7		Aug-23		$	443.1
												2024
					Oct-23		$	423.2		Sep-23		$	428.2
					Dec-23		$	419.8		Oct-23		$	413.6
					Jan-24		$	413.8		Dec-23		$	411.6
					Mar-24		$	401.8		Jan-24		$	408.8
										Mar-24	$	402.9

-The total financial instruments do not exceed 5% of total assets as of March 31, 2023.

-The notional value represents the net position as of March 31, 2023 at the exchange rate of Ps.18.02 per one dollar.

-A negative value means an unfavorable effect for the Company.

9

First Quarter 2023

Thousands of Mexican Pesos, as of March 31, 2023									PROBABLE SCENARIO
TYPE OF FINANCIAL	REASONABLE	VALUE OF THE RELATED COMMODITY	EFFECT ON THE		EFFECT ON THE CASH FLOW(3)
	Reference Value (1)
INSTRUMENT		VALUE			INCOME STATEMENT
				-2.5%		2.5%		5.0%			-2.5%		2.5%		5.0%
Forward Vanilla y KO Fwd	-$	271,562		$17.57	$	18.47	$	18.92	Direct	-$ 336,804	-$	206,327	-$	141,089
				-5%		5%		10%			-5%		5%		10%
Futures of Corn: (2)			$	6.27	$	6.94	$	7.27
Futures of Soybean Meal: (2)	$	27,566	$	442.7	$	489.3	$	512.6	The effect will	-$	15,214	$	70,346	$	113,126
Futures for Soy Oil (2)			$	52.0	$	57.5	$	60.3	materialize as the
Options for Corn	-$	10,105	$	6.27	$	6.94	$	7.27	inventory is consumed	-$	48,806	$	28,595	$	67,296
Options of Soybean Meal	$	81,921	$	442.7	$	489.3	$	512.6		$	35,433	$	128,410	$	174,898

1. The reference value is the exchange rate of Ps. $18.02 per USD as of March 31, 2023.
2. The reference values are: future of corn May 2023, $6.605 USD/bushel, the future of soybeanmeal May 2023, $466.00 USD/ton and the future of soybean oil Sep 2023, $54.78 usd cts / pound.
   'All the evaluations are performed according with the corresponding future, here only the first month futures are shown.
3. The Company has credit lines with the majority of its counterparts, so that the effect in cash flow is lower than the amount shown.

-A negative value means an unfavorable effect for the Company.

First Quarter 2023
Thousands of Mexican Pesos, as of March 31, 2023								STRESS SCENARIO
TYPE OF FINANCIAL	REASONABLE		VALUE OF THE RELATED COMMODITY	EFFECT ON THE		EFFECT ON THE CASH FLOW
		Reference Value		INCOME
INSTRUMENT	VALUE
	-50%	-25%	25%	50%	STATEMENT	-50%	-25%	25%	50%
Forward Vanilla y KO Fwd	-$271,562		$9.01	$13.52	$22.53	$27.03	Direct	-$1,576,314	-$923,937	$292,995	$827,045

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