BBB Foods Inc.

Good morning, everyone, and welcome. My name is Leonor, and I will be your conference operator. Welcome to Tiendas 3B third quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speaker's remarks and instructions will be given at that time. Please ensure that your full name is displayed correctly on Zoom. If not, please take a moment to edit your display. Also, please note that this call is for investors and analysts only. Questions from the media will not be taken, nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available to us. Today, we're joined by Tiendas 3B's Chief Executive Officer, Anthony Hatoum, and Chief Financial Officer Eduardo Pizzuto. I will now turn the call over to Anthony. Please go ahead.

Good morning, everyone, and thank you for joining 3B's third quarter 2024 earnings call. I will begin with a review of our operating results for the quarter, and Eduardo Pizzuto, our CFO, will follow me and will provide an overview of our financial performance. We will then open the floor for Q&A. I am pleased to report another strong quarter for 3B. This quarter, we opened 131 net new stores, bringing our total store count to 2,634 as of September 30th. Same store sales for the quarter grew by 11.6% year-on-year, while total revenues increased by 29.8% to reach 14.8 billion pesos. Third quarter EBITDA reached 688 million pesos. That is a 54% year-on-year increase. We prefer to measure cash flows on a cumulative year-to-year basis. Our quarterly numbers are available in our earnings report in the appendix. You can expect that this number will be volatile on a quarterly basis. For the first nine months, net cash flows provided by operating activities reached approximately 2.3 billion pesos or a 22.4 increase year on year. We ended the quarter with a net cash position of approximately 1.3 billion pesos and an additional 2.9 billion pesos in short-term U.S. bank denominated positions. In U.S. dollar terms, our total cash position remains unchanged from the same period last year. Our rapid growth continues to be self-funded. Turning to operational performance. Our store expansion is progressing strongly. As mentioned, we opened 131 net new stores in the third quarter of 24. That makes 346 net new stores if we look at the first nine months of this year. Last year for the same nine month period, we opened 243 stores. So this is a 42% increase versus last year. Regarding guidances that we shared on store openings in the range of 380 to 420, we will solidly meet them for 2024. Moving on to revenue and gross margins, Total revenue grew by 29.8% year on year for the quarter. This is driven by an increase in same store sales of 11.6% and the contributions from new stores opened in the last 24 months. Our gross profit margins compared to the same quarter last year remained flat at 15.8%. Efficiencies from scaling up were passed to price to the benefit of our customers. 3B continues to offer the market's best value for money in the products we sell. It's one of the key drivers of our success. I'll now pass the mic to Eduardo.

Thank you, Anthony. Good morning, everyone. Our SG&A as a percentage of total revenue decreased by 51 basis points year over year, from 13.9 to 13.4. Expenses as a percentage of revenue is an important metric for us. We look at it constantly to ensure a downward trend. This reflects our ongoing efforts to optimize expenses. We have seen a notable increase in our EBITDA of 54% from 447 million to 688 million pesos, or an increase of 73 basis points. This increase is driven by our sales growth and our operational efficiency. I remind you that we do not manage our business with an EBITDA goal in mind. EBITDA for us is a consequence of meeting revenues, product contribution margin, and lower cost as a percentage of sales objectives. We continue to generate significant amount of cash from changes in negative working capital. In Q3-24, our dates in favor continued to be consistent with historical trends. As of September 30th, 2024, adjusted negative working capital was 10.3% of total revenue, reflecting our operational efficiency and the strength of our business model. I'd like to remind, as Anthony mentioned at the beginning, we continue to be self-funded despite 42% increase in store openings versus last year and opening two distribution centers. I will now turn the microphone back to Anthony for closing remarks.