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Edited Transcript of FERREYC1.LM earnings conference call or presentation 7-May-20 2:00pm GMT

Q1 2020 Ferreycorp SAA Earnings Call

na May 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Ferreycorp SAA earnings conference call or presentation Thursday, May 7, 2020 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Mariela García Figari de Fabbri

Ferreycorp S.A.A. - General Manager

* Patricia Gastelumendi Lukis

Ferreycorp S.A.A. - CFO & Corporate Finance Manager

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Conference Call Participants

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* Babatunde Ojo

Harding Loevner LP - Portfolio Manager of Frontier Emerging Markets, Analyst of Frontier Emerging Markets & Partner

* Luis Adolfo Pardo Figueroa

Compass Group Peru - Co-Portfolio Manager & Head of Research

* Thiago Albuquerque

Onyx Equity Management Gestora de Investimentos Limitada - Partner & Equities Analyst

* Rafael Borja

i-advize Corporate Communications Inc. - SVP

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Presentation

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Operator [1]

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Good morning, and welcome to Ferreycorp's First Quarter 2020 Conference Call. (Operator Instructions)

It is now my pleasure to turn the call over to Rafael Borja of i-advize Corporate Communications. Sir, you may begin.

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Rafael Borja, i-advize Corporate Communications Inc. - SVP [2]

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Thank you, and welcome, everyone, to Ferreycorp's First Quarter 2020 Earnings Conference Call. Presenting on behalf of Ferreycorp, and joining us from Lima, Peru are Mrs. Mariela Garcia, Chief Executive Officer; and Mrs. Patricia Gastelumendi, Chief Financial Officer. They will be discussing Ferreycorp and subsidiaries consolidated result and the press release distributed by the company yesterday, May 6. If you have not yet received a copy of the earnings report, please visit www.ferreycorp.com.pe to download a copy, where there is also a webcast presentation to accompany discussion during this call.

Before we begin, I would like to remind you that today's call is for investors and analysts only. Therefore, question from the media will not be taken. Please be advised that comments made today by Ferreycorp's management may contain forward-looking statements, which are subject to various conditions that may differ materially. For a complete note on forward-looking results, please refer to the last page of the quarterly report.

It is now my pleasure to turn the call over to Mrs. Mariela Garcia, Chief Executive Officer of Ferreycorp, who will begin her presentation. Mariela, please go ahead.

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [3]

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Thank you, Rafael. Good morning, everyone. Welcome to Ferrycorp conference call. Thanks for joining us and for your interest in the company. Today, we will review a brief presentation, which is available in our website, to discuss the main highlights and the company results for the first quarter 2020, according to the financial statements published yesterday.

Let's start with a brief introduction. Due to the outbreak of COVID-19, the Peruvian government declared a state of emergency that began on March 16 and resulted in a house introduction and commercialization of all nonessential products being essential food, energy, health, transportation, oil and a few others. Ferrycorp and its subsidiaries have been combined with the obligatory social isolation declared by the government. Almost none of our activities have been exception from the shutdown and restrictions, such as the (inaudible) workshop, the dispatch of inventories from our warehouses, customer reception in branches and offices, et cetera. Therefore, we have showed very little commercial activities during this period. Only a minimum part of our operations have been carried out to serve clients with activities accepted by their sector. The corporation immediately observed those regulations imposed being our first priority the health and welfare of our employees, customers, suppliers and other partners.

The focus of management during these weeks have been: first, to continue customer relationship, assessing the business environment for months to come and keeping in contact with our represented brands; second, to preserve business continuously by controlling expenses, assuring access to cash and working capital management; and three, taking care of our employees, and at the same time, prepare new standards and protocols to restart operations.

The corporation and its companies are ready to return to operate again. And the high security standards, which includes new protocols and processes to restart. We are expecting to restart this month based on latest information on 4 phases decreased by government but are still in the process of confirming filings and authorizations. Our view is we will restart at a very much lower level of operations and commercial activity than the one free shutdown. And expect sales volume should return to normal levels by late third quarter or early fourth. We are confident that we will recover financial situation just as we have been able to successfully get through difficult times over almost 100 years of system. We are aligned in our experience and the support of our stakeholders, and also resting assured on our strong business model, financial position and resilience that we will continue to position us well.

Now I would like to point out -- some -- to point out some highlights and important matters that happened in the last month after our last call -- after our last quarterly call. First, the extension of this -- of the national state of emergency until April 12. After that extension, the Board agreed not to carry out our Annual Shareholder meeting that was convened on first call for March 31 and April 16 on 2nd call. This decision was taken given the inability to carry out the meeting due to the mandatory social isolation and border closure measures. As soon as the conditions allow us to call a meeting of this nature, the Board will adopt the necessary agreements to convene the annual shareholders meeting again. And this has been a matter of compensation in no meetings of the Board from March 15 till today. So this is in the agenda, and this will be decided as soon as measures by the government and all these isolation measures are lifted.

And another thing to point out is that there has been little activity in our repurchase program that was approved late October 2019. We have repurchased 5.7 million shares last year, and 11 million this year. 4 million in February and 7 million in March before the shutdown. Although the purchase of our common shares represent a desirable use of our available cash to increase shareholder value, our primary near-term objective is to prioritize liquidity and use credit lines to our operational needs and expenses. So any repurchase activity will not imply high cash utilization.

Please turn now to Slide 5 of our earnings presentation to discuss financial highlights for the first quarter. Consolidated sales for the first quarter declined 12% compared to those of first quarter 2019 and amounted to PEN 1.2 billion, affected by the operations held towards the end of the quarter in Peru and almost all the countries where we operate. Really in all of them in different manners. Despite the situation that deliver of Caterpillar equipments for mining consumers reflecting business closed in prior months, rose 53%. And other lines increased by 4% during this period, led by lubricant sales that went up 22%. It is important to mention that sales in the first 2 months were strong, even showing some slowly increase compared to 2019.

Gross profit decreased by 13% and amounted to PEN 293 million derived from mainly the reduction of activities since the shutdown. On top of that, gross margin went from 25.2% to 24.9% in the first quarter 2020 as a result of the sales mix with product support share in total sales dropped from 52% to 49%. And for our sales due to deliveries of the spare parts and services that were delayed during the quarantine. In turn, operating profit was down 39%, and to PEN 77 million, led by lower gross profit that was not offset by a reduction in SG&A.

Expenses amounted to PEN 219 million, very similar to last year first quarter expenses. It is worth noting that during the second half of March, the company recorded almost no sales, very little sales, but kept the expenses related to paid loans. Company has not taken measures to remove personnel during these difficult conditions for the country and for citizens. We have kept employees and are supporting them through this challenging moments for individuals and families.

On top of this, we must explain that SG&A was impacted by preoperating expenses to prepare our activities in an important mining project and also by IT expenses to improve our coverage and time of response nationwide. SG&A, as a percentage of total sales, therefore increased to 18.6% from the 16.1% as of March 2019.

As mentioned in our previous call this month -- or last week, the company has prepared a program to cut expenses, which will be deployed through the remainder of the year. It includes discretionary expenses such as consulting, traveling, training, events among others. Additionally, and taking into account that a 15 days quarantine have converted into a 2-month one, we have agreed with employees at temporary pay reductions and also maximization of the use of the vacations provision. Our estimate of total reduction of expenses for the period

April to December 2020 is close to PEN 100 million. First quarter 2020 EBITDA amounted to PEN 128 million and fell 30% compared to EBITDA reported in the same period last year, led by a reduction in operating profit affected by lower sales and gross margin. EBITDA margin reached 10.8%.

Now let's move to Slide 6 to review the net income during the first quarter 2020. In the first quarter, the company reached a net loss of PEN 21 million compared to net income of PEN 92 million during the same quarter 2019. This result compared to the first quarter 2019 is explained by: first, the EBITDA decreased by 30% or PEN 55 million as a result of what we just explained, lower sales and margin and still the same level of SG&A. And this result in EBITDA is also explained by financial expenses that fell 4% or PEN 1 million and main -- excuse me, this explanation of net loss. And mainly the FX loss that decreased by 431% or PEN 104 million and was a loss led by the devaluation of the local currency against the dollar in both countries, Peru, with 3.77% and Chile, bigger of 13.8%.

Also, depreciation and amortization went down 8% or PEN 4 million and income tax dropped in PEN 42 million led by lower earnings before tax. At this point, I want to refer to the PEN 80 million exchange loss recorded in this quarter, which is accounting-wise, as we always explained because the inventory is registered in Peru soles but will be sold in dollar. This will allow the loss recovery in the upcoming months. As of March, the inventory reserve is in the range of PEN 60 million.

We will now review the commercial performance. Please turn to Slide 8 to explain the behavior of main lines of businesses during the first quarter. When analyzing the results by business lines, almost all were affected by the operations halt in the latter part of the quarter. Sales of Caterpillar mining trucks and equipment for large mining customers amounted to PEN 110 million and went up 53% compared to first quarter 2019, led by delivery of mining trucks and machines reflecting business closed in prior months. This business line represent 9% of total sales. Likewise, other line grew 4%, mainly driven by lubricant sales that increased by 22%, as we mentioned before. On the other hand, parts and services achieved sales for PEN 578 million, 18% below first quarter 2019.

Please let's go to Slide 9 to review our results by group of companies during the first quarter. When we analyze sales by groups of subsidiaries, those from Ferreyros, Orvisa and Unimaq, the Caterpillar dealers in Peru, represent 73% of total sales and reduced 13%. Nevertheless, Caterpillar mining equipment that ramped up 53% as a result of important deliveries of mining machines to 2 main customers. In turn, our Orvisa and Unimaq sales dropped by 1.4% and 7.6%, respectively, while Ferreyros sales fell by 14.4%.

Gross margin for this group of companies reached to 26% compared to gross margin in the first quarter 2019 of 26.7%, mainly driven by lower share of spare parts and services that accounted to 66% of overall sales of this group of companies. The companies that carry Caterpillar business and other lines in Central America, represents 10% of total sales and went down only 3% compared to the first quarter 2019, mainly led by rental and used equipment business line that first 44% and spare part services that enhance 14%. The operational cost in almost all the contracts were these subsidiaries are located and started in the last week of March and affected mainly Gentrac in Guatemala. In the other hand, (inaudible) in (inaudible) increased sales by 10% and continued with its operation attending customers from the agricultural sector, essential activity that didn't stop. Gross margin in first quarter 2020 in these companies increased to 25%.

The third group, the local subsidiaries and business abroad that complement the Caterpillar business represents 17% of total revenues and decreased 12%, driven mainly by trade sales outside Peru that strong 25% derived from the delay of equipment deliveries due to the quarantine and that will be delivered during the second quarter this year. Gross margin for this group of companies reached 20% in this quarter.

Now move to Slide 11 to review the state of financial position main accounts. As we have informed before, as soon as shutdown started, we initiated a program to raise funds. By the end of March 2020, we maintained a strong financial position with a cash balance of $105 million, and a balance sheet to provide liquidity in these periods of economic uncertainty. Total assets amounted to PEN 5.9 billion and increased by 8% or PEN 460 million compared to March last year. The variation in total assets compared to March 2019 is mainly explained by the cash equivalent that rose by PEN 251 million, as part to the totally taken by the corporation to increase liquidity in this environment. And also inventory that rose by PEN 119 million, led by trade strains that will be delivered in Chile and Peru in the upcoming months and Unimaq parts to serve their customers.

Our inventory of mining equipment amounted to $86 million and is related to deliver care for the upcoming months. Additionally, intangible assets that have been increasing in the last 3 years due to the investments in the ERP implementation. We'll refer to this when we explain our CapEx. The cash conversion cycle compared to March 2019 went from 163 to 169 days as of March 2020. This result is mainly impacted by inventory days that rose from 149 to 159 but benefited from collection days that dropped from 67 to 56 days. Payable days reduced from 53 to 47 days. We must point out the total receivables debt of provision as of March 2020 account for $223 million. Mining represents approximately 48% of the accounts receivable portfolio as of March, and mining has continued to pay mostly on time. With a delay of very few days, reflected in an effective payment ratio of 70%. Meanwhile, construction represents approximately 20% of the accounts receivable portfolio. This sector has been affected in a greater extent by the operational hazard during this week. Some customers have asked to rescale or postpone the installments, which is being analyzed case-by-case in order to attend those requests. Especially in the case of those clients who have always shown their trade commitment.

Now let's turn to Slide 13 to discuss our CapEx. Net investment in fixed assets as of March 2020 reached to $7 million, composed mainly by a (inaudible), $3 million that were invested in infrastructure and work in progress for additional work in the Component Rebuilt Center in La Joya, and for the refurbishing in the (inaudible) warehouse facility in order to update it through best practices and high-end risk in corridors. $3 million to replace units in the rental fleet and $1 million for components for mining equipment. The investment in intangible assets reached PEN 13 million or $4 million in this quarter, mainly related to the implementation of ERP SAP platform. Ferreyros should go live in the second semester 2020 after the other subsidies that went live last year. So on that date, we will start to record the corresponding amortization according to the debt lines established by current accounting regulation.

Since the beginning of the project in 2016, Ferreycorp has invested PEN 196 million. It is important to mention that due to this challenging situation, we have adjusted the CapEx budget for this year from $50 million to something around $20 million is still to be monitored and adjusted as needed.

Now please turn to Slide 13 to discuss the consolidated financial debt. As of March 2020, financial debt amounted to $732 million and rose by 25% or $148 million compared to March 2019. Mainly driven by assets increase as a result of higher cash balance. It is important to mention that the financial debt includes $35 million derived from IFRS 16 application. Leverage ratio, net debt-to-EBITDA ratio flat to 3.4% and adjusted debt-to-EBITDA ratio reached to 2.4%. Most ratios within our covenant limit of 3.5%. We also continue to maintain a 96% exposure to U.S. dollar-denominated debt as seen in previous quarters.

Since March 16, we've drawn down $240 million, both from local banks and Caterpillar Financial. As a result, we have assured cash to cover expenses payments to suppliers and importation of any required reposition of the inventories and also to cover any contingency in the upcoming months. At the end of March, maturities for 2020 accounts for $366 million as a result of new borrowings under the strategy to prioritize liquidities. We have stable liabilities that were due between April and June, and we have assured million SAR financing during the quarantine, which will reflect in the next quarter results. In this way, current maturities as of March 2020 accounted to 62% of total debt. We must point out that we may grow the debt maturity for (inaudible). Financial expenses posted a 4% reduction and amounted to PEN 22 million, even with more financial liabilities to cover the increase of assets, as explained before. This was possible by a lower average interest rate in this first quarter of 4.3% -- or 3.2% compared to the 4.3% last year. The impact of these new borrowers that we have explained that have been taken from March 16 here on. The impact in financial expenses will be seen in the months to come.

Now I want to close my presentation with some remarks. We consider that the results of the first quarter 2020 reflect very strong commercial performance in the first 2.5 months that have then faced the immediate heart of operations with support to employees. This strategy is in line with our mission to build a better world and the more we lease companies play in the societies. We're optimistic about the future of the business scenario in the remainder of the year, led by the strength of the industry's reserve that shall lead the economic recovery of the countries where we operate, supported by the strong capabilities we have built. We will continue with our strategy aimed to profitable growth and shareholder value creation, leadership in the markets where we have presence, high customer satisfaction and positive feedback in stakeholders.

Thank you for your time. And now we'll be glad to take your questions. As always, we will add you to make sure that any telephone line issue does not interfere with our understanding of your questions, you can -- if possible, you can also pose them to Elizabeth Tamayo, our IR contact with us today. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Thiago Albuquerque with Onyx.

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Thiago Albuquerque, Onyx Equity Management Gestora de Investimentos Limitada - Partner & Equities Analyst [2]

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I have 2 questions actually. The first one is just to clarify, you have mentioned the debt that you have already negotiated during the quarantine, those $240 million. Just want to understand which part of that is already reflected at your quarter-end balance sheet, if any part, I'm not sure. And the second one, if you could just walk us through your expected cash generation or cash burn for the coming quarters. If we assume that activity will recover the mid-May but still keep in a slow motion, how much of your working capital, and by this I mean, how much of your inventory and account receivables would you be able to reduce in the coming quarters as a result of the deliveries? For instance, those tracks equipment that you have mentioned in your press release.

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [3]

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Thiago, thanks for your participation and for your question. And as we were explaining in the call, up to March, we had already raised part of those $240 million by the end of March. And that also reflects in the increase in our debt, and our debt increased to $732 million. So what we raised in the first 15 days was in the range of $100 million, which is what we have in our cash. We said that we have cash for $105 million. So that we raised 0.5% of what we have done later on and delaying those $240 million. Patricia, I don't know if you can confirm the numbers. So it's around $100 million that were taken in the second quarter of March and then $140 million that were completed in the following weeks. Please, Patricia, can you confirm those?

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Patricia Gastelumendi Lukis, Ferreycorp S.A.A. - CFO & Corporate Finance Manager [4]

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Yes. Mariela, those are the amounts.

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [5]

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Okay. So that takes care of the first question. In the second one, Thiago, we will continue to adjust our scenarios. We are making a lot of assumptions but we need to confirm those assumptions in the weeks to come. But our expectation is that our expenses will be reduced in this PEN 100 million -- close to PEN 100 million that we mentioned throughout the call. Some of that -- most of that in second and third quarter, because these reductions in payments to at least is a temporary measure in some companies only for 3 months. Other companies -- so 4 other companies are still depending on each company's situation. And of course, if needed we will discuss renewal of those agreements. But we think the critical moment in the second quarter, where we expect we can reduce our cash burn by around $10 million with -- excuse me, less than that $8 million by this different measures that we have taken and also in -- well, with these different measures. And on top of that, we are projecting that our -- the sales that we can -- and have between May and June will allow us to generate gross profit in the range of PEN 180 million, more or less, that can make whole of the operating expenses or operating outflows for this second quarter. That's more or less what we are envisioning right now. But we need to adjust our assumptions, as I mentioned, once we go back to business.

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Thiago Albuquerque, Onyx Equity Management Gestora de Investimentos Limitada - Partner & Equities Analyst [6]

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Just a quick follow-up --

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [7]

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As I minor a complete quarter, but the situation in April is completely different because in April we have not generated any of this gross profit or a very, very, very small one, but we believe that in last May and June, we might be getting some gross profit revenues, pay our operating outflows. At this time, we wish (inaudible) operating because we're not operating at our (inaudible) fixed outflows.

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Thiago Albuquerque, Onyx Equity Management Gestora de Investimentos Limitada - Partner & Equities Analyst [8]

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And just a quick follow-up. If you -- just to understand those equipment that you have or are carrying at your inventories that should be delivered in the upcoming months. Have you talked recently to the clients just to understand more or less of how could be the timing of those deliveries and the consequent cash, the collection of the receivables related to them?

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [9]

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Yes. So we have a different product line in the inventory. As it was mentioned in the call, one of the reasons why inventories increased from this March compared to last March, we have some cases from the trade company. Some of that for Chile, and we have been in very close contact with customers there. And they are very much interested in getting these cranes. It has been mainly banking procedures because these cranes are being financed by financial entities that have delayed these deliveries, and we expect to deliver them in the second quarter. The good news is that in Chile, the quarantine has been managed in a different manner. And we expect -- and the impact in business has been lower than in Peru. And also, we expect that this operations can be closed and fulfilled in a faster pace. We also have in our inventory track to deliver to an important project here. And I think we covered this in our call last week that has announced a suspension or postponement for some months, but we still expect to deliver these units in the fourth quarter. It will take more time to get them to the site and assemble them in the site, but we expect that can happen in the fourth quarter.

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Operator [10]

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Our next question comes from Tunde Ojo with Harding Loevner.

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Babatunde Ojo, Harding Loevner LP - Portfolio Manager of Frontier Emerging Markets, Analyst of Frontier Emerging Markets & Partner [11]

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Just 2 questions for me. First is, do you know the exact date when your operations are going to be open again, and I'm talking about full opening where your warehouse and your centers will be able to start serving customers again? I know you mentioned May in the press release, but I was wondering if you know the exact date right now or it's still not announced yet. And second question is on your covenant. The adjusted debt to EBITDA, which has a limit of 3.5x. What are the penalties involved if you ever bridge this covenant limit?

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [12]

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Thank you for the call. Look, at this point, we don't have an exact date. So what the government has said, there is for phases to -- for companies and businesses to come back to work once for each month, May, June, July, August. In May, there are 27 activities that are mainly our -- the sectors that we serve, so mining, construction. It is also mentioned machinery and equipment. We understand that we are in this first phase, but it's not only -- so we have -- we know we are -- we understand we are in this first phase in May. But on top of that decree where the government mentioned which are the activities in this phases and this is the first phase. We have also imposed some filings and authorization per period. So we need to send the letter to different ministries because we operate in different activities and sectors. And then you need to register the companies in a COVID system integrated cell. COVID system that has been created. And we don't know exactly when we are going to get authorization to register ourselves there. So an exact date, we don't have, but we expect it will be next week. On top of that, we need to take our personnel back to operations. We are instructing that any function that can be done from home will continue to be in home office. But -- and then we will only move personnel that can next work from home, which is mainly warehouses and service shops. And also move people to the site. And that has to be coordinated with the mining company. Usually, our personnel gets in the mining company to work back. So that's a lot of coordination. So even though we can be ready for next Monday or Tuesday, and it depends on the authorization, then another coordination needs to be with the mine. So that means -- explains what would happen between next week and the next one. And we are doing the same for all the companies in the corporation, the same metric to the ministries and the registration on this health system. And we all know the companies we have protocols. The protocols have been socialized with the employees, meetings with employees to make sure they understand the protocols. We are also working on procedures to make some tests to our personnel. As we get availability to test, which is a scarce resource in the world and in Peru as well. In order to have a better understanding of the health of our employees and to avoid situations that will prevent us from being operative. So that takes part -- care of your first question.

The second one regarding covenants, we need to point out that as of now, most of the debt arrangements are with 4, 5 financial institutions, and all of them have also provided new borrowings in this strategy and program that we commented. So all of them are well aware of the situation. All of them are well aware of our projections. So even if -- we expect that going back to business in May, will allow us to bring new EBITDA and be safe with the covenants at the level it is right now, that is within the covenant. But even if we cannot bring EBITDA in the following weeks, we think that the conversation with these 5 financial institutions is going to be reasonable and that they will allow us to navigate in this situation even providing information, providing projections and so on.

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Babatunde Ojo, Harding Loevner LP - Portfolio Manager of Frontier Emerging Markets, Analyst of Frontier Emerging Markets & Partner [13]

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Yes. All right. Understood. And I know that the probability of that happening is low right now given where you are. Just wanted to get a sense of what the potential impact, but this is very helpful.

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Operator [14]

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And our next question comes from Luis Pardo with Compass Group.

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Luis Adolfo Pardo Figueroa, Compass Group Peru - Co-Portfolio Manager & Head of Research [15]

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Just one quick question. How is your relationship with your mining clients. I know they have to go through protocols before you can start. But how is your payment team behaving in this period where they are also impacted and you are impacted and everybody else is impacted? And the second part of the question is, if you could give us more color on your relationship with Cat because we saw the Cat Financial support on the release. That is very reassuring. But if you could give us more color, it would be very helpful.

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [16]

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Thank you, Luis. Thank you for participating and for your question. Yes, as we mentioned at the production as a whole -- is the management has been focusing in several topics, being one of them, to keep very close relationship with our customers, not only mining, but all of them. And as you know, we are structuring in different companies, and each company is also structuring different areas and commercial divisions. So all of them have been in close contact with customers. Regarding mining, of course, we have been in close contact with them. We (inaudible) have some small crew in some of the operations. So we are having personal contacts every day still with them. And they have been eager to coordinate with the ministry of their sector to put together a protocol and be able to go back to work so they are eager to do that. And we are in close contact with them to make sure that we go along with them. So very good communication and relationship. And at the same time, we were focused in keeping relationships with customers and also with our represented brands, Caterpillar, Agco, Tata, all of them, we have been having different calls throughout the shutdown. And with Caterpillar, we have a weekly call at the regional management level, but there's also weekly calls in the different divisions. So mining has calls and construction has calls and so on. And they are informing us dealers, everything they are doing first, to keep their financial position. They have also been announcing some financial structures. And also keeping the factories up to speed, taking care of any restraints from their suppliers, and they have been adjusting and managing around any shortage from any suppliers in any country because we know this shutdown management has been varying in its week. It has been different in each country. So China is already after that, and Chinese operations are up to speed. And then Europe, have some challenges and then not in America, but it has been varying through the different regions. So they have been informing to us. And altogether, they have shown no relevant impact in their sourcing and manufacturing capability. So that's also very good news that they bring to our weekly meeting. So very good relationship both these customers and represented brands. The same we had with Agco last week. They have been also managing very well their supplying and manufacturing capabilities.

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Operator [17]

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(Operator Instructions) And it appears that we have no questions at this time. I will now like to turn the program back to Mrs. Garcia for any closing remarks.

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Mariela García Figari de Fabbri, Ferreycorp S.A.A. - General Manager [18]

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Thank you. So I want to thank you all for participating in our conference today and for your interest in Ferreycorp. We will continue to bring information as we continue to reassure the market. And when we go back to business and have more visibility on the recovery in the pace and the profoundness of the recovery, we will get back to you even if it is before our next quarterly results. We will continue to have this very close communication. We understand that U.S. investors and important shareholders want to have the most information possible of what is going to be our performance in the months and to come. In case you have any additional questions throughout these weeks and before our next call, please don't hesitate to contact us. We are all on your disposal, Patricia, Lizzie and myself. So thank you very much again for your support, for being close to us, and have a good day. Goodbye.