BBB Foods Inc.

Good morning, everyone. My name is Daniela, and I will be your conference operator. Welcome to Tiendas 3B fourth quarter and full year 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, and if not, please take a moment to edit your display name. Also, please note 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 are joined by Tientas 3B's Chairman and 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 us on this earnings call where we're going to talk about our fourth quarter and full year 2024. I will begin with a review of our operating results and will be followed by our CFO, Eduardo Pizzuto. who will provide an overview of our financial performance and an outline for our guidance for 2025. We will conclude with a Q&A session to answer any questions you may have. I'm pleased to report another strong year and another strong quarter for 3B. We opened 138 net new stores during the fourth quarter, and a total of 484 new stores for the full year. Same-store sales growth for the fourth quarter grew by 11.8% compared to 4Q2023 and for the full year grew by 13.4% compared to last year. Total revenues for the fourth quarter increased by 32.7% to 16.3 billion pesos and full-year revenues increased by 30.3% to 57.4 billion pesos. For the year, net cash flows generated by operating activity reached 3.749 million pesos, a 19.4% increase year over year. We ended the year with a net cash position of approximately 1.4 billion pesos, and in addition to that, We have about 150 million US dollars that we've kept since our IPO last year. Let's turn to operational performance. Starting with store openings. We successfully accelerated our store opening, closing the year with a store count above our original guidance. As mentioned, we opened 138 net new stores in the fourth quarter, and for the full year, we opened 484 net new stores, a 21% increase over 2023. We continue to increase the density of our stores in the geographies where we currently operate, and at the same time, we are stretching to new geographies. And in 2024, we opened two new distribution centers. Moving on to revenues and same-store sales growth. Total revenues for the full year were 57.4 billion pesos, growing over 30% year-over-year. Not on the slide, our fourth quarter, we saw 16.3 billion pesos, a 32.7% increase over last year. In the pink bubbles that you see at the bottom of this chart, we have same-store sales growth, and for the year we saw a 13.4 growth rate, and that's significant given the notable decrease in inflation. Going on to the next slide where we can look at quarterly same-store sales growth and compare them to Antad's numbers, we continue to significantly outperform the Antad number throughout the year. In the fourth quarter, our same-store sales grew by 11.8%, well above Antat's 2.6%. And even as the overall market appears to have slowed down in the second half of the year, our momentum has remained strong. And I think our strong value proposition is driving this. When the economy is slowing down and the cost of living is rising, that tends to play in our favor. Some of you will be familiar with the spaghetti chart, which we updated. These are the sales curves of our 2005 to 2023 cohort of stores. These numbers are adjusted for inflation. You will note that the newer cohorts of stores start with a higher sales level and grow faster than our older stores. And you'll note that no curve has yet flattened up. What is driving this is a continuous improvement in our value proposition to customers. And this happens when you scale because you drive costs down and you improve your private labels quality and features. So as a result, you offer better value to your clients. The portfolio of products that you find today in our stores is significantly better than what you would have found in our stores five years ago. So as a result, our existing customers buy more from us and we gain new customers. I also add that our brand 3B is getting stronger. Our clients know what we stand for and trust us more every day. And that helps our new stores start stronger. If we go into more detail, we see that our sales growth in 2024 was driven by both higher store traffic and increased ticket size. For our stores with five or more years of operations, we saw a 4.6% increase in the number of transactions per store per month, and a 3.6 increase in the average ticket size. This growth was driven by the increase in value we offer our clients, in big part from our private labels. And our private labels now represent 54% of our sales, up from 47% in 2023. I'll pass the mic now to Eduardo.

Thank you, Anthony. Good morning, everyone. SG&A has a percentage of revenue increased by 96 basis points, reaching 15.2% in Q4 2024. Here's a breakdown. Sales expenses rose 40 basis points from 11.3% to 11.7%. However, this includes approximately 47 basis points of non-recurring, non-cash expenses. Excluding these, sales expenses decline as a percentage of revenue. Moving on to admin expenses, increased by 56 basis points from 2.9 to 3.4%. And approximately 11 basis points are non-recurring cash expenses, mainly related to legal matters and preparing for our follow-on offering in Q1. Excluding these, admin expenses rolled at 45 basis points. Now, this increase is mainly driven by hiring additional personnel to support our growth, public company expenses, such as reporting and compliance, and expansion of our regional operations. In the first quarter of 2025, we expect to record Approximately about $2 million for a full one. Over time, we expect our admin expenses to decrease as a percentage of sales as we continue to build a solid foundation for a future growth and comply with the public company requirements. Moving on to EBITDA and EBITDA margin. Our EBITDA for Q4 2024 reached 845 million pesos, or a 5.2% margin, which represents a 51% growth versus Q4 of last year. For the full year, EBITDA reached 2.8 billion pesos, or a 5% margin, which represents 51% growth versus 2023. I do remind you that we do not manage our business with an EBITDA goal in mind. EBITDA for us is a consequence of meeting our objectives of revenue, product contribution, margin, and lower cost as a percentage of sales. Moving on to negative working capital. As you can see from the chart, our negative working capital continues to be very strong. As of December 31st, 2024, adjusted negative working capital represented 10.6% of total revenue. It continues to reflect our operational efficiency and the strength of our company. As mentioned in previous calls, this is a unique business model that generates a significant amount of cash. In 2024, we once again self-funded our aggressive growth, clearly demonstrating the strength and resilience of the hard discount business model. And finally, moving on to our guidance for 2025. We are operating under uncertain environment, but historically, 3B has performed well during economic downturns and periods of uncertainty, but also in economic upturns. And thus, we continue to grow strongly. For 2025, our same-store sales guidance is between 11% and 14%. Total revenue growth in the range of 26 to 29%. And we plan to open between 500 and 550 new stores. Overall, we expect a very strong year. I will now turn the call back to Anthony for closing remarks.