Gruma, S.A.B. de C.V. (GRUMAB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Gruma's First Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Ral Cavazos, Gruma's Chief Financial Officer. Please go ahead, sir.

Thank you, Rob. Good morning, everyone, and thank you for joining us today. We are pleased to discuss our first quarter 2020 performance review. During the beginning of the year, our first quarter results show significant increases in volume, net sales and EBITDA at our all subsidiaries aside from our operations in China, which represent less than 1% of consolidated net sales. While there is a little positive anyone could say about the coronavirus outbreak, due to the defensive nature of our business, we are seeing stronger results in the rest of our operations, especially in the U.S. This defensive nature was proved on our sales volume, which rose 6% during the quarter, where the U.S. division was the main contributor, in absolute terms, where they commanded 9% and 15% volume and net sales growth, respectively. Moreover, the change in sales between channels in the U.S. as consumers stop eating at restaurants and substitute those volumes by acquiring tortillas at supermarkets and grocery stores has improved our margins. In Mexico, although the tortilla industry is very stable on a per capita consumption basis, we also grew above expectations. On a consolidated basis, our EBITDA rose 22% and EBITDA margin improved 80 basis points to 16.3%, driven mainly by the U.S. division. The comprehensive financing cost was MXN 1.3 billion higher, primarily in connection with noncash FX losses of MXN 1 billion on intercompany loans. Income taxes were 36% less due mainly to lower pretax income primarily for the aforementioned noncash losses on intercompany loans. The effective tax rate rose to 40.4% from 36.7% mostly in connection with FX losses, which reduced consolidated pretax income while profitable businesses had to pay their corresponding taxes. Net majority income declined 45% coming from FX losses. In terms of CapEx, we invested $26 million for capacity expansions in the U.K., our plant in Dallas and Spain. Gruma debt declined by $46 million during the quarter to end at $1.4 billion. Our net debt-to-EBITDA ratio was 2x. Now talking about our main subsidiaries. At Gruma USA, sales volume rose 9%, while corn flour grew 12% and tortilla 8%. Net sales increased 13% on the back volume growth and higher average prices, especially at our tortilla operations due to a better sales mix within the retail business and the change between channels favoring retail rather than food service. EBITDA rose 18%, and EBITDA margin improved 90 basis points to 18.7%. At GIMSA, sales volume rose 3% due to mainly higher retail sales amidst the coronavirus outbreak and higher sales to the Mexican government. Net sales increased 8% reflecting price increases implemented at the end of 2019. EBITDA rose 11% driven by FX gains on corn hedging. EBITDA margin improved 50 basis points to 16.9%. At Gruma Europe, sales volume surged 17% while the corn milling business rose 26%, mainly from higher sales to snack producers. The tortilla business was flat as consumers' buying amidst COVID-19 at the retail channel offset reductions at food service. Net sales increased 5%; EBITDA, 31%; and EBITDA margin expanded 160 basis points to 8.1%. At Gruma Centroamrica, sales volume rose 5% mainly due to consumer demand arising from the effect of the coronavirus outbreak. Net sales increased 13% driven by sales volume growth and peso weakness. EBITDA increased 12%, and EBITDA margin was flat at 11.8%. On the other subsidiaries and elimination line, EBITDA declined MXN 57 billion from lower activity at the technology division and weak sales in China due to the COVID-19. As we can see, demand for our products in the current environment has increased in every key market, generating a positive impact on our performance within some of this shift in connection with structure of business going forward, but this remains to see how volumes evolve once extraordinary sales is in. In terms of guidance for 2020, we prefer to be conservative considering the same guidance for the rest of the year. But of course, there will be this positive contribution on a yearly basis by the benefit sales seen in this quarter, especially in the U.S. On other matters, I'm glad to announce that tomorrow at our Annual Shareholders' Meeting, we will propose a dividend payment of MXN 5.64 per share, which will be paid on a quarterly basis, representing a yield of around 2.8% based on our current price of the stock. We will also be proposing the cancellation of 15.5 million shares that were bought back during the last 12 months, representing a reduction of about 3.7% of our standard shares. Both concepts together, the dividend payments and the cancellation of shares, are yielding around 6.5% to our shareholders. At this point, we are ready to take your questions. Rob, please can you help us? Thank you.

[Operator Instructions] Our first question comes from Barbara Halberstadt with JPMorgan.

So my first question is on working capital for the quarter. So just wanted to understand a little bit better the increase in accounts payables, and also if we expect this trend to continue, or if you can just give some more color on how working capital usage is going to be throughout this quarter? And my second question is on the committed credit lines. So if you could give us some update if the credit line is still available and confirm again the amount.

Sure, Barbara. You are talking about accounts payables, means accounts receivables or payable, just to make sure?

On the supplier side, but in...

On the supplier side, okay.

Yes. But in general, the working capital trend would be good, if you had a little bit more understanding.

Yes, sure. Well, let me tell you that due to this coronavirus, some of our clients have been asking us for additional deals or extend the payment terms a little bit. We've seen the same requests from our suppliers, and they allow us to extend a little bit the term -- the terms. We receive from them about 30 days more from our payables, and we give them 15 days more for our clients particularly in the food service. But the most important thing in both sides, accounts payables and accounts receivables, have to see with the exchange rate. Because it's going to be basically the same amounts, particularly or basically in the U.S., Europe and the rest of the world. But because of higher exchange rate, we increase these amounts. That's going to be the most important, but I just wanted to clarify about the increases on accounts payable a little bit and accounts receivable also. In terms of credit lines, let me tell you that the company had about $600 million on uncommitted facilities available. But also, the company have currently about $500 million, $500 million of committed facilities. The price is, I think, going to be something between LIBOR plus 75 or -- and LIBOR plus 100 basis points that will mature in 2022 and 2024. There are going to be a couple of lines. One of them is -- one of them for $250 million. Then our liquidity is basically assured for both sides, the cash generation for the company, which is doing very well, as well as this committed facility we have from the banks. And we've been talking with them, and they feel comfortable and confident that they will honor these positions if the company requests to do so.

Our next question comes from Alan Alanis with Santander.

I have 2 questions. The first one is operational. You were mentioning about the extraordinary purchases in supermarkets more than offsetting the decline in the purchases from food service. How do you see this playing out once it stabilizes throughout in the remaining of the year? Do you think that the on -- the off-premise and the supermarket chains will be able to sustain for the whole year, an equivalent or even larger amount of sales that you've lost because of the closure of the restaurants? That will be my first question, Ral.

Yes. Talking about your question. While we see currently during this month of April volumes on that retail has been -- also still been higher, we see this same trend, let's say, for this month of April, and I think it's going to be the same case for April and May. And once things get normalize between -- the relationship between retail and food service is going to be normalized actually. We are expecting some restaurants are starting to open operations in Southern California. That's going to be maybe on a step-by-step opening new restaurants throughout the States. And eventually, we will normalize. We are expecting to basically normalize at the same trend that we had before the coronavirus. But again, at this point in time, we see the same trend in terms of higher volumes on retail and lower volumes in -- on food service.

Got it. That makes sense. And my second question has to do with the FX losses on the intercompany loans. Those amount for around 33% year-over-year, and the depreciation of the peso is actually 2/3 of that. If I'm calculating numbers correctly, it's a little bit over 22%. So I'm trying to understand, well, 2 things. What exactly are those intercompany loans? What is driving such a big increase in FX losses above the change in the exchange rate? And what should we expect going forward with those FX losses?

Yes, sure, Alan. You are absolutely right. This was basically a transaction that we've been doing between Gruma Corp. and GRUMA, S.A.B. Our standing amount of loan currently is about $250 million. We used the cash from Gruma Corp. as Gruma Corp. was generating a lot of cash, and we are basically using part of the cash from Gruma Corp. to, let's say, satisfy our requirements at GRUMA, S.A.B. level. Then we have some losses in the first quarter. But going forward, what you can expect this, due to the fact that we already declare a dividend payment from Gruma Corp. to GRUMA, S.A.B. that will be paid by the middle of May, with this dividend payment is going to be for the full amount of the current loan in between both companies. We will pay down the debt. Then what we can expect is that you don't want to have any kind of issue or additional FX losses going forward because of this loan. We're going to be -- if we do that, just to avoid any additional loss -- FX losses at the holding company.

Got it. Got it. So it's going to be, basically, going to be repaid with the dividend from Gruma USA. Okay.

Yes, that's exactly right.

Fair enough. Congratulations for the results.

Thank you.

Our next question comes from Isabella Simonato with Bank of America.

I joined a little late, so sorry if I -- if my questions have been answered. But could you give us a little update of how you're seeing volumes and demand in the U.S. now in April? I mean we saw in different sectors some more sustainable demand, although there's deceleration after consumers stocked up. Can you give us a little sense of what you guys are seeing in the U.S.? And now that restrictions in Mexico are also -- were also imposed, how are you seeing the dynamic there?

Sure, Isabella. Yes, this was a question that we already answered, but no problem at all. During this month of April, we've seen the same trend in the same volumes at Gruma Corp., growing double digit on the retail side and lower food service sales because of the closures of the restaurants. But once this coronavirus crisis or coronavirus contingency passed, what we are expecting is that everything will be normalized going forward for the future. We are expecting that maybe April and May will be basically the same. But let me tell you that we already see some kind of a small increase on sales on food service because some of the restaurants start to open their doors for the public in some particular areas. And we are expecting that they're going to be eventually, step by step, going to open more restaurants and also because of they already switched to the delivery and they are also serving the menus in this particular way. Talking about Mexico, the corn flour. Let me tell you that we are working at full capacity in Mexico. Everything is doing really well. We've been supporting our U.S. operations in corn flour, not only from Mexicali but also from the Nuevo Len facility as well as from the Chalco facility because the increase of demand of corn flour in the States is going up. And actually, we are limiting the sales of corn flour packets per person or per family just to try to not have the shelf space without our product, that's what the stores are doing. And in the same case, we are working at full capacity here in Mexico as well as in the States. The sales on the -- this month of April, we are basically seeing the same trend that we saw during the first quarter in Mexico, particularly because of higher volumes on the supermarkets as well as majoristas, the wholesalers in Mexico. We are increasing at 20% with them, and they are distributing the 1-kilo packets of corn flour. Then we see we have very good expectations for Mexico as well for the States. Everywhere, corn flour in the world or in the Americas, let's say, the U.S., Mexico and Central America, we are working at full capacity. This is going to be in the next, maybe, couple of months during April and May and eventually will be normalized. We are not expecting or we are not seeing -- we are not sure it's going to be by June or by July. But we are expecting that sometime during the year, maybe in a couple of months more, will be normalized the consumption. And we are not expecting any kind of important issue with sales once the store-level volumes is in.

Our next question comes from Miguel Tortolero with GBM.

Congrats on the result. Regarding the U.S., I understand the change in China towards retail. But within retail, you also mentioned improvements in mix, which actually was impressive. Just would like you to help me understand better here if those improvements are coming from something you're doing differently, probably from the marketing, more focus on the point of sale, or if this is just the consumer behaving differently now? And the second question, in Mexico. You mentioned that part of the volume increase was explained by higher sales to government accounts. I understand that during last year, sales were actually impacted by lower sales in this channel. So I just would like to understand better here, is the increase in sales a onetimer probably coming from the disruption of COVID-19 or is it something you expect to continue? Whatever you can share on this matter would be helpful.

Sure, Miguel. We are talking about the volumes in the U.S. on the retail -- in the retail side. And let me tell you that we increased the sales in this particular channel importantly because also in agreement with our clients, we eliminate some kind of SKUs, and we were more efficient reducing some particular SKUs, that the most important one in terms of volumes as well as in terms of profitability, they are here with us. And we were able to supply more volume for the stores. Currently, let me tell you that on the retail side, we have, in terms of volumes, 80% going to retail, 20% going to food service. However, in terms of sales -- net sales, we are talking about 87% on retail and 13% on food service. Particularly in the -- on the retail, we have a very good performance of our value-added products. We have our star products, which is low-carb tortilla, which is growing in a very good way. We are growing a good balance, let's say, 10% -- 3% in volumes compared with the same last year. However, in terms of net sales, we are talking about an increase of 10%. But the low-carb tortilla have a contribution margin higher than 40%, which is substantially higher than some other kind of products. Volumes is increasing about 40% of low-carb tortilla in the U.S. This is the star of our products, commanding the increase on the retail. And this is going to be basically the same trend. We are expecting the same trend. The low-carb tortilla has been going up during the last, let's say, 12 months in a very important way. And we don't see any kind of change or important change going forward for the rest of the year and going -- and in the future. Talking about Mexico. Yes, last year, Mexican government was a little bit, let's say, starting the operation of the administration. They didn't know how to manage that. But what we see now because of this, they are making -- they are requesting some flour -- corn flour for their stores as well as for the centers where they provide tortilla. And this is going to be basically the same trend for the rest of the year because already need -- as they already need this corn flour, and they already are very well positioned under this administration. Then we do not see any important change on these governmental sales. But let me tell you that if, for any reason the Mexican government currently, they don't ask for additional corn flour, at this point in time, we can sell additional corn flour for some other division in the States or in Central America. Even here in Mexico, the volume are growing a lot. We don't see any kind of -- see any potential risk on that in GIMSA for this -- for the full year this year.

Our next question comes from Felipe Ucros with Scotiabank.

Congratulations again on the results. I had a few questions, but let me start with the one about restaurants because you mentioned that there's an experience of some restaurants opening up in Southern California. So I was wondering if you had any idea how the attendance is going in those restaurants that have already been opening up? And I'm asking this because we've had some reports from food service consultants discussing how in China, restaurants opened up already more than a month ago since the quarantine has ended, but they are only operating at around 40% of capacity when compared to last year. So it seems that even though restaurants open up, maybe the crowds are not coming back, and maybe this effect of the shift to retail may be more prolonged than we were originally expecting. How are you seeing those restaurants in Southern California doing?

Yes, you are right, Felipe. Thus -- let me -- I cannot assure how market is in the Southern California. But we have seen some increases in volumes as for the food service clients, not as much, of course, but that's what I said, step by step. Because of course, once the restaurants are opened, the distance in between any table must be kept and that people -- the consumer also have kind of concern how they will be safe in a restaurant, and maybe they want to wait for a little more. You have to try to -- going back to the restaurant. Then this is going to be step by step. We are starting to grow our volumes in Gruma Corp. in the food service, but it is going to be slowly for the next maybe 6 months or something like that. In China, you are right, we start to grow the sales volumes, applying socials. All the restaurants have been starting to open. The attendance are a little bit lower than last year. However, it's important to mention that it's not all the volume we were selling to the restaurants are moving to the retail. We are starting to grow. Let me tell you that in the first quarter of the year, we saw the restaurants, we would operate in at about 25% of our production capacity. Currently, we're about 60%, and it's growing on a step-by-step basis.

Okay. That's very helpful. I wanted to touch on innovation, but I think you already gave us an idea that the innovation side of things is going very well in the U.S. and you're managing to increase prices there. So maybe we can move to corn prices. Obviously, corn has been correcting. It's pretty obvious that it's related to oil prices coming down as much as they have. Have you taken an opportunity to hedge even further? I think last time we spoke, you were 40% hedged for 2021. Just wondering if you've managed to increase that even more and secure better margins for the next year.

Yes, sure. Yes, as you have seen -- all of you have seen the price of the corn in the market has been going down not only because of the oil prices going down but also because of the announcement of the USDA 3 weeks ago, where they mentioned that intentioned planting area was to grow at about 94 million acres, which means about 6 million or 8 million more than the intention of last year. Then we are expecting to have a huge amount of corn. We've been taking advantage of the decreases of prices of the corn in the market. However, we usually -- particularly for the U.S., we usually, by August, get bushels, all the corn, we set the price of the corn that we will mill within the next exercise, and we announce price increase or decrease with our clients by September or October, October to start by the middle of October. For the year, because of that, we already agree internally that we're going to wait unless the -- we don't see any kind of reason for that at this point in time. But if for any reason, they do not use the whole amount of area, as they announced, to planting the corn. Or if for any reason, the weather coming right in the next months because once the corn is planted, that becomes our market. If the weather does not change, we will wait until September, October to push the whole position and try to get the lower cost of corn because it's when the corn harvest in the States is taking place. For the -- this is for the first. And then we will announce price decrease or changes on prices by the end of November maybe or even December. At this point in time, we have a little bit more than 40% of our corn, and we are about 6% lower than the average price of the corn in the market year-to-date. This is for the U.S. For Mexico, we already set the price for the corn for the second half because keep in mind and remember please that the corn prices in Mexico for the second half of the year, basically, must be set with the corn producers by the -- in between February and beginning March. Then we already set the price. We have a lower cost of corn for the second half. Let me tell you that the first half in 2020, we have corn at $4.02 per bushel. In -- for the second half, we have $3.65. Also, we have FX hedges, and we have currently about $210 million on hedges, foreign exchange rate. This exchange rate is at MXN 19.36 per dollar, out of which about $150 million to $160 million are capped to MXN 21, another $50 million are free. We have not any kind of constraint. Then with that in mind, we will review what will be the final results, and we will see if we will require to increase prices or not. Our preference is to not increase prices for the second half of the year. Instead -- or wait until by the end of the year. But at this point in time, we are not expecting -- we have not any -- in each quarter, we want to go by the results by the middle of the year, let's say, if we will increase prices in July or not. But this is our position where we are and what we can see in the next months.

Our next question comes from Ron Dadina with MUFG.

Congratulations on the very good results for first quarter. I have 2 questions. One is, we are seeing in the U.S. that many food service companies or other companies have not been able to easily make the transition from wholesale supplies to restaurants, hotels, et cetera, to retail. So my first question was, have you, Gruma, found any difficulties in pushing more product into the retail channel in comparison to distributing to restaurants and hotels? And my second question was that also, in the U.S., more and more food plants are being infected with COVID. There are some plants where hundreds of workers have been impacted. So are your workers in any of your plants impacted with COVID? And also, what precautions are you taking to avoid similar problems in your plants both in the U.S., Mexico and everywhere else? Appreciate your response to these questions.

Sure, Ron. Well, talking about the food service, we are not pushing anything. What we saw basically is, of course, in some particular cases -- and not in the food service companies, but it was basically for distributors on the food service, let's say, Sysco and these kind of companies. They ask to -- they call to cancel some future products or future, so they already have in place. And we move immediately the production for the retail. But we are not pushing them. They are asking us for additional product because the shelf space is really a massive demand for corn tortilla, for wheat flour tortilla, for any kind of product for tortillas. And we are working in the facilities in the States in a very good way, trying to supply as much as we can in every single region in the States. Then we do not see any issue with that. In terms of infections, let me tell you that the company is not infection. The company has some kind of infections in some of our plants. We have about 100 -- a little bit more than 100 infections in our facilities in the States, particularly one of them is a little bit more infected. The one is located in Pennsylvania. We've been working. We will follow up all the infected employees. We manage very closely with them. Most of the people infected have been recovered, and they are going back to work in the facility. This facility was affected a little bit because, for example, corn operation, corn tortilla operation, corn products operation, corn for tortilla and chips were not affected everywhere, always was working as usual. In the wheat flour side, we have 8 production lines. We -- at some point in time because of lack of people and because -- not only because infected but because of the no-show employees to the facility, we reduced production up to 2 out of 8. Now we are working with about 6 out of 8 lines. And this is the most important facility in terms of infections. The others, we have some other infections on -- in Washington State in Fife, close to Seattle. We have about 5 persons infected, something or a little lower, also recovered. And that's the way we are managing these infected cases with the people supporting them and their families in everything -- trying to have everything be okay. We also have 2 others cases in Southern California facilities. Panorama in California and Venice in Italy, we have a couple of cases in both facilities. And they have been out of the operations, of course, since the -- before this kind of issues. We are taking all the provisions in terms of -- we are following up the CDC, the Control Disease Center in the States, all their recommendations in terms of the business and between an employee in terms of the mask, in terms of gloves, in terms of sanitizers, in terms of hand washes, in terms of everything. We also are taking temperatures for any single employee. No matter who it is, every single employee has been taken by the temperature before enter to the facility or to the installations or offices. All the personnel of the company in the, let's say, offices and corporate offices, which are on common areas, are working at home. Some of the persons that have offices -- closed offices are working at home. Some others are coming to the company. We've been providing -- following up, gloves, masks and sanitizers. We already have transportation for our employees. We sanitize the buses in every single route they do. We have the distances in between any seat in order to not have any kind of people together. We have been following up. And this is everywhere, everywhere we are operating, the States, Mexico, Central America, even the same case in China, Europe, et cetera. Unfortunately, we cannot predict anything. But what we can assure you that we are taking everything into consideration just to be sure that our facilities are quite clean and the innocuity for us is quite important. Once we have a new case, the plant is stopped and is sanitized from A to Z. Everything is sanitized just to have an innocuity room for everything in our products. All the transportations, we have not people coming from outside. And we are -- if they are, we are managing the transport in between the gate of the plant to the ducks. We charge and we deliver the truck outside the gate, et cetera. We are taking all the provisions for any single country that they are asking for. Let me tell you that in some cases, particularly in Central America as well as in some, actually, in U.S. and in Europe, in the corn flour facilities, they asked us to stop operation, to lock down the operation of this -- to shut down the facilities. We say, "Okay, but keep in mind that we are a food processor, and we are providing food." In the case of Europe, it was really for the food industry as well as corn mass for tortillas and chips. In the particular case of Honduras in Central America, we provide corn flour for tortillas. And they said, "Guys, you are okay. Please do not stop the facility." They give us kind of passports. In the particular case of Honduras, they impose kind of -- I don't know how to say, toque de queda.

A permission.

Yes. No, a permission to circulate at some point of time during the day or night. We have passports in the trucks for the people, for the facility just to move between the home and the facility. Also, we are, in any single town, shift in our facilities. Asking all our employees to keep away from the people and be at home, that's the only way we are doing. And let me tell you that a company with about 2,001 -- 21,000 employees or 21,000 families, having about 110 cases in the world is not bad. Again, all of them are really -- most of them, not all of them, excuse me, but most of them are recovered.

Our next question comes from Lucas Ferreira...

Excuse me, excuse me. If you just -- I would want to add some things for the last question, Ron. We have some visits from the health authorities on Pennsylvania as well as in Southern California in our facility in Mountain Top in Pennsylvania as well as in Olympic Boulevard in California. And they agree that we are doing everything that they require to avoid any kind of infections in the facility. Sorry for the interruption, Ron and Rob.

So they did not shut down the plant, right? They are still letting you operate, right?

Yes, exactly, Ron. Sorry, Rob.

That's okay. Our next question comes from Lucas Ferreira with JPMorgan.

Ral, I also joined a few minutes late, so I'm sorry if you answered these questions in the very beginning of the call. But the first question was an update on your capital allocation and CapEx. So with this new situation, I know you had plans of increasing your operations in Spain and also in New York. So my question is if this scenario now delays these plans a little bit. And if yes, what could we expect to be the new CapEx plan for the company for this year? I know the last update today was something around $250 million. And the other question is regarding -- you mentioned quickly in the release some extra transportation costs in Mexico. Just wondering if you can explore that a little better if this is a trend or some sort of a one-off.

Sure, Lucas. Let me tell you, first of all, talking about the CapEx. The CapEx for this quarter was really low. What I want to do is just to keep the same amount that we announced at the beginning of the year, which will be $250 million for the year. We are a little bit delayed. Yes, in the particular case of Spain, the expansion was stopped because of the authorities asked to everybody be at home. But it's going to be delayed for maybe 3 weeks or a month or something about that. But the plans continue in the same trend. We already increased provision capacity at the U.K. facility in the -- in Coventry with an traditional production line, which we are expecting to be commissioned to operate next week -- as soon as next week. In the States, we are not expecting to have any facility in New York. What we were -- what we announced was a new facility on Indiana. The plan continue to -- in this process. Again, it will be a little bit -- a little delay because of this coronavirus contingency, but it's going to be there. We are producing our production lines for any single plant, we are producing additional products -- we are constructing additional production lines for our Dallas facility, for our Florida facility and some others and, of course, building new facility -- new lines for the new facility that will be in Indiana. But we are expecting it is going to be, by the end of the year, beginning next. Then in terms of CapEx, what I can tell you is going to be basically the same amount and the same play. We are not changing any kind of play because of the coronavirus because we think that everything will go back to normal, and we're going to be there. Market is growing, and the same rationale we used to make decisions in this CapEx is still be applicable at the current times. Then maybe the $220 million could be a little bit delayed and could be a little bit lower. But at this point in time, we feel comfortable telling you that we want to keep the same amount of CapEx for the full year. Talking about the extra transportation expenses in Mexico. This is not a trend. This is because now we are supporting from some other facilities, not only from Mexicali facility but also from the Monterrey facility as well as from the Chalco facility to the -- to our U.S. operations in terms of additional corn flour. That's why we increased. Also some increases between inter-facility, let's say, in the plants in the company's sales shipments. But we are expecting that this goes back at a normal rate or the normal amounts that you saw in the past once this coronavirus continuously goes away.

Perfect. If I may follow up on the buybacks and dividends, as you mentioned, CapEx won't change. So I suspect that your plans of -- your payout plans and buybacks should also not change. Is that the case? So can you comment about that?

Well, let me tell you that we will still be using the purchase form to buy back shares. That also will be proposed tomorrow on the shareholders' meeting just to approve same amount. Even we are asking for some additional amount, let's say, we are doubling the amount of -- we're asking the permission for the shareholder meeting if they approve. What we are expecting for them is going to be that we will use basically the same amount we used during the last 12 months, which will be MXN 3.5 billion. Even the approval will be for MXN 7 billion, we are expecting that we're going to be MXN 3 billion, MXN 3.5 billion, the usage of that purchase form for the next 12 months. But yes, we will still be supporting the share. We think that this is -- we have a good price. And again, we don't want to increase the dividend payment because we don't want to commit on this new amount. What we are doing basically is paying part of the dividend through cash, through a dividend payment as we will approve the model, and the other dividend through the cancellation of some shares on the market. But also, this year, it's going to be 6.5%. It's going to be, I think, a very good return for the shareholders.

Our next question comes from [ Eduardo Estrada ] with Bank of America Asset Management.

Well, most -- almost all my questions were answered. Just let me ask you something different. Basically, well, you have had some pressure in the transportation in the U.S. due to an economy which was at full employment. Now unfortunately, we will have a recession. So do you think that would change the situation? Do you expect some lower pressure that could help you to increase your margins in the U.S.?

Yes. Talking about the transportation pressure in the States. At this point in the coronavirus, contingency is a little bit more pressured on that, unfortunately, because everything is shipping through trucks. But eventually, eventually once this continues to be normalized, we are expecting to be or to have a lower -- maybe a lower cost because the availability of transportation will be higher or the equipment to transport our products will be higher than currently are. Also, that's why part of the decision to make a new facility in Indiana, it was because of the cost of transport and try to avoid kind of this transportation personae. The answer is yes, we are expecting to have maybe a little bit lower freight expenses in the near future in the U.S.

[Operator Instructions] There are no further questions. At this time, I'd like to turn the call back over to Mr. Ral Cavazos for closing comments.

Thank you, Rob. Well, once again, thank you all, all of you guys, and thank you very much for joining us today. And please be safe, be careful, take care and be safe with your families. Thank you very much. And if you have any question, please feel free to contact us, and we will be pleased to talk to you again. Thank you very much, and have a great day. Bye-bye.

Ladies and gentlemen, this concludes Gruma's First Quarter 2020 Earnings Conference Call. We thank you for your participation. You may now disconnect.