BBB Foods Inc.

Good morning, everyone. My name is Leonor, and I will be your conference operator. Welcome to Tiendas 3B second quarter 2025 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 name. 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 chairman and chief executive officer, Anthony Hattum, 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 Tiendas 3B's second quarter 2025 earnings call. I will begin with a review of our operating results for the quarter and will be followed by our CFO, Eduardo Pizzuto, who will provide an overview of our financial performance. We will conclude with a Q&A session to answer any questions you may have. We continue to add breadth and depth to our management team. Today, I would like to take the opportunity to welcome to the team two new members. Amparo Martinez, who joins us as general counsel, and Joaquin Ley, who will head investor relations. Welcome. We delivered another quarter of exceptional growth, far outperforming other listed grocery retailers in Mexico due to our unrivaled value proposition. In Q2, we opened 142 net new stores for a total of 3,031 stores. Our store opening rate is accelerating. Together with this acceleration of store openings, we have invested in four new regions that we will open in the second half of this year. That means four new distribution centers, logistics, and all the personnel required to run it and its operations. Same store sales grew by 17.7% versus 10.7% in the second quarter of last year. Total revenues increased by 38.3% to reach 18.8 billion pesos. EBITDA increased by 22.5% to reach 844 million pesos. If we exclude our share-based payment expense, which is non-cash, then our EBITDA would have increased by 32%. During this first semester, cash flow generated by operating activities reached 1.9 billion pesos, or a 56% increase versus 2024. We ended with a net local cash position of approximately 1.1 billion pesos, and we have $150 million cash position, mostly from funds we raised at the IPO. Let's turn to operational performance. We are increasing the number and the rate of store openings. In the first six months of this year, we opened 259 stores compared to the 215 stores we opened in the first half of the previous year. If we look at this on a 12-month basis, we opened 528 stores versus 460 stores in the previous 12 months. Our revenue growth remains rapid. We continue to be one of the fastest growing retailers in Mexico and possibly globally. Total revenues reached 18.8 billion pesos, an increase of 38% year over year, with very strong same store sales growth rates of 17.7%. Same store sales growth continues to be driven by continuous improvements in our value proposition to our customers. and we are seeing an increasing number of tickets as well as an increasing number of items per ticket when compared to untad we appear to be increasing the gap in the growth rate of same store sales we see in the second quarter a larger gap of 15 percentage points i will now pass the mic to eduardo

Thank you, Anthony. Good morning, everyone. Sales expenses as a percentage of revenue slightly increased from 10.4 to 10.5%. This increase had two main drivers. Due to our accelerated rate of store openings, we see higher store personnel and DNA expenses. This is normal. 45% of our total store base was open during the last three years. As newer store vintages mature, sales expenses naturally decrease as a percentage of revenue. This is what happened with our older vintages. Moving on to admin expenses. Admin expenses as a percentage of revenue increased by 31 basis points from 3.6 to 3.9%. This includes recognizing an incremental 111 million in non-cash share-based payment expenses. To recap our share-based compensation plans, it consists of a legacy plans of 20 years that terminated at IPO and a new standard plan that started at IPO. In addition, this June, our board granted a share-based awards tied to our IPO. This award announcing our IPO and follow-on documentation does not change our fully diluted share count. It was already factored in. It just results now in an accounting recognition of non-cash expenses upon granting. For those investors who prefer to look at this non-cash expense, we have made it easy to review by providing a breakdown in the appendix of our earnings release. We encourage you to read it. Moving on to EBITDA. EBITDA reached 844 million pesos, a 22.5% increase year over year. EBITDA margin was 4.5% down 58 basis points. The margin impact mainly comes from higher logistics costs associated with our opening of four new regions in the second half of this year, non-cash share-based payment expenses, and the acceleration of our store opening rate. If we exclude non-cash share-based payments, then the EBITDA margin would have been 5.8%, down 27 basis points. And our EBITDA would have increased 32% year-over-year. I would like to anticipate the very normal question about operating leverage. It is real, but hard to see when viewed on a consolidated basis. That, given the increasing rate of store openings. But when we look at it on a store vintage basis, we see it clearly. And therefore, we're confident that when our store opening rates flatten, it will become very evident. However, we choose to go for the higher growth rates as this is what is going to maximize shareholder value creation. Finding a working capital. Our business is a business model that generates significant negative working capital. And in turn, we generate significant cash flow from the changes in negative working capital. We can see, for example, that in June 24, we had 5 billion pesos compared to a negative working capital of 7 billion pesos in the second quarter of 25, excluding IPO proceeds. We are roughly at 10.5% of total revenue LTM, excluding IPO proceeds. Our accelerated growth continues to be self-funded. I will now turn the call back to Anthony for final remarks.