Fomento Economico Mexicano S.A.B. de C.V.

Good day and welcome to today's FEMSIS Fourth Quarter 2024 Results Conference Call. Throughout today's presentation, all participants will be in the listen-only mode. Later, there will be an opportunity to ask questions and instructions will be provided at that time. This meeting is being recorded. And now I'd like to hand the call over to Juan Fonseca. Please go ahead, sir.

Good morning, everyone, and welcome to FEMSIS Fourth Quarter and Full Year 2024 Results Conference Call. Today we are joined by José Antonio Fernández Carvajal, FEMSA's CEO and chairman of the board, Martín Arias, our CFO, and Jorge Collazo, who heads Coca-Cola FEMSA's investor relations team. The plan for today is for José Antonio to open the conversation with some high-level comments on the full year results, some thoughts on our capital allocation framework, as well as a quick update on management succession. Martín will then cover our quarterly results, as well as provide more detail on our capital return plans. Finally, we will turn it back to Jose Antonio for some closing remarks and then open the call for your questions. Jose Antonio, please go ahead.

Thank you, Juan. Good morning, everyone. Let me begin by talking about census results for the full year 2024. As you have seen in our report, our consolidated numbers show double-digit growth across the earnings line items of the income statement as well as notable margin expansion. These numbers reflect very strong performances at our two largest business units, Proximity Americas and Coca-Cola FENSA, coupled with solid delivery from the rest of the operations And while the numbers are important as we track our progress, I believe there are just as important messages underlying these results. Everybody talks about focusing on profitable growth, but it takes time, effort, and skill to build the platforms and the capability to achieve that kind of compounding on a sustained, long-term basis. For example, When we look at what is driving growth at OXO in Mexico, while it is important that we keep opening high productivity new locations, which the team managed to excel at in 2024, it's just as important to look at the new capabilities related to data analytics, segmentation, and revenue management. These capabilities enable us to adapt our value proposition to an expanding variety of consumer environments, each requiring a different assortment and pricing combination. Similarly, we are increasingly able to develop and offer more sophisticated promotional activities to our supplier partners, as well as provide an ever-growing list of services that give our customer more reasons to visit and more needs that they can satisfy at our stores, driving and sustaining our performance. And then, of course, and just as importantly, we can offer many of these capabilities to other territories like Europe, the United States, and Brazil, and other formats such as VARA and our Cofenio drive-thru. On the Coca-Cola FEMSA front, it has been remarkable to watch the constant evolution of our digital capabilities and how essential they have become to the growth and momentum of the business. Just as important is how these digital capabilities are evolving into a platform that will allow us to develop new lines of business and will help us maintain our leadership position in key categories. as well as achieve leadership in new ones. Across our business units, we are facing rich opportunity sets, and our teams are performing at a high level, which makes us optimistic as we look ahead. The second topic I wanted to discuss today is SAMHSA Forward. Two years after its launch, Today, we are almost finished with the planned divestitures. Having monetized an aggregate headline amount of approximately $10.7 billion, we simplified our structure and focused on our core business units. On the capital return front, in addition to paying the related taxes, we used approximately $1.7 billion to repurchase our debt under attractive terms And during 2024, we deployed approximately 44.8 billion pesos, or $2.5 billion, at the exchange rate at the time of payment in a combination of ordinary dividends of 14.4 billion pesos, extraordinary dividends of 10.1 billion pesos, and share buyback of 20.3 billion pesos. However, we are still far from our leverage objective of two times net debt to EBITDA ex quo. Martin will provide you with more details in a few minutes, but assuming no extraordinary circumstances beyond our control, and in order to maximize the efficiency of our balance sheet, our plans to 2025 and 2026 involves accelerating the pace of our capital returns to reach that steady state leverage in a disciplined fashion that takes into account rates, market dynamics, and geopolitical perspectives. Our plans for 2025 to be presented at the next shareholders meeting are to deploy, including ordinary dividends, also almost 66 billion pesos or 3.2 billion dollars of current exchange rates over the next 12 months. This amount includes 14.8 billion pesos of ordinary dividends and 51.2 billion of extraordinary dividends and buybacks representing a 10.4% yield for shareholders at the current market capitalization. Our current plans for 2026 are to deploy, including ordinary dividends, almost 41.4 billion pesos or $2 billion at current exchange rates. This amount assumes an amount equal to this year's ordinary dividends of 14.8 billion pesos plus a minimum of 26.6 billion pesos of extraordinary dividends and totaling an additional 6.4% in yield for shareholders at the current market capitalization. The total sum of the amounts allocated and committed for the next two-year period between 2025 and 2026 is and $7.4 billion, or nearly $5.3 billion at current exchange rates, which represents approximately 17% of the market cap of FEMSA as of the close of yesterday. This action should significantly help us reach our target level ratio by the end of 2026. As we have stated before, our broader capital allocation strategy aims to drive our long-term intrinsic value per share as we understand that having an efficient balance sheet and returning capital to shareholders plays a key role in that strategy. As you probably read in our release, and in line with the timeframe we discussed on this call last year, during 2025, we plan to carry out the succession process for the position of CEO of PHMSA, which I hold on an interim basis. Since late last year, the Corporate Practices and Nominations Committee of PHMSA's Board of Directors has been diligently working on designing and developing the actions required for this important process. During the board meeting yesterday, this committee recommended the creation of a special committee of the board to oversee this process throughout this year. The board approved this recommendation. The special committee will consist of seven directors, each of whom are independent. The special committee will be chaired by Ricardo Saldívar, who is the chairman of the Corporate Practices and Nomination Committee of FEMSA. The committee will include all the other members of the committee, Gibu Thomas, Ricardo Guajardo, and Jaime El Curi. And in addition of them, The following directors will also form part of this special committee. Michael Larson, Elaine Stock, and Olga Gonzalez. Upon completion of their evaluation, the special committee will submit its recommendation to the board of directors. We will communicate the board's decision at the appropriate time. In designing and executing this process, as in prior CEO designations, we will have adhered to the highest corporate standards. We have engaged a leading global firm with extensive experience in such matters, along with other advisors from various specialties. And with that, let me turn it over to Martin.