BBB Foods Inc.

Good morning, everyone. My name is Sophia, and I will be a conference operator. Welcome to Tiendas 3D first quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. There will be instructions 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 are joined by Tienda 3B Chairman and Chief Executive Officer, Anthony Hatoum, and Chief Financial Officer, Eduardo Pizuto. I will now turn the call over to Anthony. Please go ahead.

Good morning and thank you for joining us today. 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 the questions you may have. We delivered another quarter of excellent performance and started the year with a strong momentum. Let me briefly highlight a few key results from the quarter. We opened 123 net use stores in this quarter for a total of 3,469 stores, bringing the LTM net store openings to 580. As of the end of this quarter, we had 20 distribution centers up and running. Our same store sales growth grew 16% versus the first quarter, of 2025. Revenues in the first quarter of 2016 increased by 33% year over year to 23 billion pesos. And again, in this first quarter reported EBITDA was 554 million pesos. If we exclude non-cash share based compensation, EBITDA increased by 39% to reach 1.3 billion pesos. Finally, for the first three months of 2026, cash flow generated from operating activity reached 2 billion pesos, or a 64% increase year over year. Let's take a look at operational performance. When we look at store openings, as we mentioned before, we opened 123 net-use stores in the first quarter. For the last 12 months, we opened 580 net new stores. That's a 20% growth compared to the number of stores that we reported in March of 2025. Our expansion strategy remains consistent. We continue to densify existing regions while gradually expanding into new ones. Revenue growth remains strong. We continue to be one of the fastest growing retailers globally. Total revenue in the first quarter reached $23 billion, an increase of 33% year-over-year. We've seen very strong same-store sales growth of 16%. And this same-store sales growth is driven in large part by the ongoing improvement in our value proposition to customers and also stronger brand recognition of the brand 3B that we see every day getting stronger and stronger. When we compare our same-store sales performance with ANTAD, the gap remains notable. What we're seeing is a gap of more than 14 percentage points, and that despite operating with very low internal inflation. I will now pass the microphone to Abraham.

Thank you, Anthony. Good morning, everyone. Sales expenses as a percentage of revenue increased by five basis points to 10.3% year-over-year in the first quarter of 2026. Most of the expense lines showed operating leverage, with a slight increase mainly driven by utilities, permitting, and a higher V&A. Admin expenses excluding share-based payment remain unchanged. In the first quarter of 2026, we continue our investment in new regions and additional talent to support our growth. Separately, first quarter of 2025 included a one-time expense of 54 million pesos related to the secondary follow-up. With respect to share-based payment expense, these charges are non-cash and already reflected in our fully diluted share gap. Additional details are available in the appendix of this earning projections for this non-cash expense. EBITDA for the first quarter of 2026, excluding non-cash share-based payment expense, increased 39% to $1.3 billion, primarily driven by strong sales growth. The adjusted EBITDA margin increased by 22 basis points year-over-year. As you know, we don't drive to an EBITDA. It will continue to increase over time, driven by the work we continue to do. Our business model generates significant negative working capital, which in turn supports strong operating cash flow. In the first quarter of 2026, adjusted negative working capital reached 9.4 billion pesos, compared to 6.5 billion pesos in 2025, excluding IPO proceeds. This represents approximately 11.3% of total LTN revenue, also excluding IPO proceeds. Our accelerated growth continues to be self-funded. I will now turn the call back over to Anthony for some final remarks.

This is a very strong start to a 2026 that looks very promising. We operate a high-growth business model that is resilient and that does very well across economic cycles. It is a business that offers very attractive unit economics, generates cash, and becomes more competitive as it scales. The market potential is enormous, and the runway for opening stores is very long. I am excited and remain confident about the future of 3B. Thank you for joining us today. We will start the Q&A session. Please go ahead, operator.

Thank you. We will now conduct the Q&A session with Anthony Hatun and Eduardo Pizzuto. If you would like to ask a question, please press the raise your hand button located at the bottom of the screen. We remind you that all lines have been placed on mute. When it is your turn to ask a question, you will be given permission to speak. You will then be able to unmute yourself and ask your question. Our first question comes from the line of Hector Maya.

Please take your company name and ask your question.

Hi Anthony, Eduardo, Joaquin, thank you very much for taking my questions and congratulations on the results. We saw a key competitor implementing some adjustments which they said led to better results in March. Have you seen anything different in the competition dynamics? Particularly, would you please comment if you have seen any kind of change or impact on your sales in March and April? And also just a quick clarification from your press release and different filings, we have seen that the expiration of the local period is coming in August 6th of this year. But in your 20F, we saw that it expires in July 8th. So just to double check, when exactly does the lockup expire and how should investors think about it in terms of stock overhang? Thank you very much.

Hi, Hector. Good to hear from you. Yeah, just to be super clear, it's August 6th for the expiration of the lockup. In terms of competition, you know, as well as we do, this is a very competitive market, always has been. But specifically, if we have seen anything different this quarter, the answer is no.

I understand. Thank you. Thank you very much.

Hector, we will amend the 20F just to be specific on the August 6th, just so you know.

Super. Yeah, it was a bit confusing, but thank you for the clarification. Thank you.

Our next question comes from the line of Andrew Rubin. Please state your company name and ask your question.

Hi, Andrew Rubin from Morgan Stanley. One of the items you mentioned as one of the same sort of sales drivers was brand recognition that it continues to improve. I'm curious first how you measure and identify this. And second, we know it's a minimal marketing approach, so if you talk about brand building as you move into the newer regions and how you would kind of compare that brand recognition in your newer versus more dense markets, that would be interesting. Thank you.

Hi, Andrew. Let me start with the latter part. You know, brand recognition is a little bit of an interesting beast in a sense. We measure it just to be very concrete. We do massive surveys every year. Roughly 15,000 customers and non-customers on a wide geographical area are old and gives us a fairly good sense of what the 3B brand means to most people that are relevant to us. In terms of, you know, another factor that you want to take into account is because of our expansion strategy, which is stretching. By the time we get to a new region, We've already, you know, people already know us because we're not jumping to a completely new region. It's been a gradual stretching of the areas in which we operate. So there's, you know, that helps a lot in terms of, you know, coming into something new and people already know you. They might have already shopped with you, an existing store, et cetera. So that goes a long way. In terms of, you know, what we spend, you're absolutely right. We're minimal spend in terms of advertising. and it's mostly word of mouth and social media. And, you know, if you just go and Google 3B on the Internet, you'll see that there is a slew of materials talking about 3B and 3B products, et cetera, and a large, large part of it is not us. It's, you know, our customers posting about us, and that helps a lot.

Very helpful. Thank you.

Our next question comes from the line of Bob Ford. Please state your company name and ask your question.

Hey, good morning, everybody. This is Bob over at Bank of America Corp. Anthony, how advantaged are you in the process of building out the skill sets and the redundancy in your central administrative staff? And then I was wondering if you could also provide us a short update on the progress of the new ERP and maybe the window for your expected deployment. And then lastly, you know, I'm really excited about your repetibles, right? And I was curious how they're evolving and maybe how you're thinking about merchandising in the second quarter, particularly when it comes to things like Mother's Day and the World Cup.

Great. Let me start with the latter one as it's fresh in my mind. The repetibles are very important and they add a lot of excitement to the shopping experience in our store because As most of you know, there are products that change roughly every two weeks, and it's always like a trigger hunt and a wow effect that you find in these baskets. And we've been able to sell in these baskets of irrepetibles a lot of things, and we've sold bicycles, we've sold white and brown goods, we've sold clothing, and we continue to do so, and it's a very exciting category for us, and one that's shown tremendous potential and growth. So don't be surprised if you see this continuing to evolve and take more participation within 3D sales. In terms of hiring and what's happening in central offices, as you know, we're very focused on increasing the density of talent, as we firmly believe that that's what drives everything at the end of the day. If you're going to punch above your weight and if you're going to move at the speed at which we move, the key ingredient is talent. And so we will continue to invest in talent this year and probably through 2027. I mean, at some point it tapers off in relation to the total size of the company. But at this stage, consider that we're in growth mode. And I think it's an excellent investment that we're making here for the future. The deployment of the ERP is well underway, and I personally am very happy with the progress we're seeing. So this is, as I mentioned in previous calls, a three-year project. And so I think we're halfway through now.

And when you deploy, will you deploy in modules? Will there be some functionality introduced to the stores before the completion?

Yeah, always it's gradual and modular, and that's the way to do it low risk. You deploy, you test, then you expand it.

And when it comes to changing functional POS systems or just the hardware at the point of sale, how should we think about that?

Again, the deployment is planned to be gradual to minimize risks. Understood. Thank you so much. You will see it appear in one region, and then it will be fine-tuned, refined, and then once it's, let's say, bulletproof, it gets deployed to the rest of the company. Got it.

Thank you.

Our next question comes from the line of Alejandro Fuchs. Please state your company name and ask your question.

Thank you, operator. Alejandro Fuchs from Itaú BBA. Hello, Anthony, Eduardo. Thank you for the space for questions, and congratulations on a very strong start of the year. I just have two brief ones. First one for Eduardo. I was wondering, Eduardo, if maybe you could break down for us sales growth between traffic and tickets, so we can get a little more color. And then the second for Anthony. I wanted to see, Anthony, if maybe you could provide more details on how you're seeing these new stores performing outside of the center of Mexico, how has been their relative performance this quarter between the different regions. If you can maybe elaborate a little bit more into differences in different parts of Mexico, that would be very interesting. Thank you.

Hi, Alejandro. It is two-thirds is coming from volume, which is transactions and number of SKUs per ticket, and one-third by average price per SKU. And just to be clear, the latter one is largely driven by a better mix because our internal inflation remains close to – it's very low. So, again, it's two-thirds from volume and a third from average price per SKU.

Hi, Alejandro. We have seen very consistent performance across the board in new stores irrespective of geography. And the reason we believe is because we are selling basic goods and behavior in consumption when it comes to basic goods tends to be quite similar across the board. And we all consume roughly the same amount of toilet paper irrespective of where we live. And you'll see that... It's been fairly consistent, I would say.

No changes yet.

Our next question comes from the line of Lorena Romanato. Please state your company name and ask your question.

Hi, everyone. This is Gabriella. I'm from Goldman Sachs. I would like to explore a bit more the SG&A dynamics in the context of the minimum wage increase and the reduction in work make in Mexico. Is there any measures that have been implemented to address this continuing increase in labor costs? And we know that SG&A also came broadly stable year over year with revenues, and we know there is quite a variable component there as you accelerate extension. But how should we think about that trajectory during the course of the year? Thank you.

Hi, Gabriela. Multiple questions here, but I'll start with you mentioned labor. Labor, yes, it's a component. And what I would say is, as you saw in my presentation, for selling expenses, we saw leverage in most of line items, including labor. So when we look at expenses, and this is the way we look at expenses as a percentage of revenue, this is something that continues to decrease. If we compare last year versus this year, labor did decrease as a percentage of revenue. And the reason for that is twofold. One is because our sales continue to increase. And then the second one is we do a number of initiatives inside the store, and not only the store, also at the distribution centers, As we've mentioned before, we measure everything on hours worked, so we're always having initiatives to reduce the number of hours worked at the store level. So even with the increase in minimum wage, we were able to see leverage on that line item. In terms of the reduction of hours worked, This is something that, yes, we have been testing and we have been considering, and when it happens, it happens, which will happen next year. And this is something really not a big concern on our side. We will continue to drive efficiencies at the store level to be able to cope with that eventuality. In terms of overall SG&A for the year that you also asked, We don't really provide any type of guidance on SG&A. What we've said before is that in the long run, you can expect that SG&A will continue to decrease as it will decrease as a percentage of revenue. For this year, G&A, we should expect that it's fairly stable as what you saw last year, as you heard Anthony. we will continue to increase our talent pool here in headquarters. And also because we're adding more distribution centers this year, that also has a portion of admin expenses.

Perfect. Thank you. Our next question comes from the line of Froyland Mendez. Please state your company name and ask your question.

Hello, Eduardo, Anthony. Thank you for taking my question. Florian Mendez from JP Morgan. Eduardo, could you just give a little bit more granularity on the sources of gross margin expansion during the quarter? I know you mentioned this was mainly coming from commercial margin, but was it on improved terms, product mix, or some operational efficiencies? And secondly, you mentioned those big services you do every year. I was wondering what have been the key findings from this year's survey compared to last year's surveys regarding changes in consumer habits, preferences, and how is this information influencing your strategic decisions at the store? Thank you so much.

Let me take that one, Freeland. How are you?

All good.

On the massive surveys, basically they ask questions about where do you shop, how do you shop, why do you shop. How do you make a decision? Where do you spend your money? What do you think of the brand? Do you know what it means? Et cetera, et cetera, et cetera. So what we do see over time is an increasing brand recognition of the 3B brand and what it stands for. And then we also see shifts in decision-making. Where do you shop first versus where do you shop second? And I think all the tendencies favor 3B. And you see a very strong favorable tendency over the last five years. In terms of exactly influencing our decision, yes, it does, because there's definitely shifts in consumption patterns. Some categories gain strength and some lose strength. So, you know, post-COVID and during COVID, anything related to pets, strengthening and anything related to consumption of alcohol, that decreases. And you see those things and, of course, you adapt and you focus more on those that have more promise. and that's completely normal, and we do that on a continuous basis.

Roy, in terms of your question on gross margin, yeah, we did mention that commercial margin on the increases. It's both on the two topics that you mentioned. It's NICs, it's efficiencies, but I'll end up with saying that it continues to be volatile, right? So, but this specific quarter, yes, it's both. It's mixed and driven by efficiencies with our suppliers.

Yeah, and I mean, I'll add, Freuland, that, you know, it's no secret that as you scale, you are improving your purchasing power across the board, and not only ours, but, you know, whoever is supplying us with products also gains purchasing power. So, and gains efficiencies, and those translate partially into margin and partially go into price, and that basically drives the virtuous circle. Perfect. Thank you very much, gentlemen.

Our next question comes from the line of Antonio Hernandez. Please state your company name and ask your question.

Hi. Good morning. Congrats on your results. This is Antonio Hernandez from Actimberge. Just a quick one regarding which categories were best performing during the quarter, and also regarding your recent pilots, any findings that you have there.

Thanks. Across the board, all categories have done extremely well this quarter, and I would say, you know, if you look at some subcategories, we've seen a decrease in sweetened beverages, and that's driven by a new tax on sweeteners that kicked in in January, but it was more than compensated for by the non-sweetened beverage subcategory. And so net, you know, an increase across the board in all categories. What was your second question? Sorry.

Regarding, for example, the fridge, frozen, all these different, like, new product categories within the store, any new findings, or how are these New categories working out for you.

Well, they're doing extremely well. And one thing to keep in mind is that we don't launch a new category unless it's been extensively tested, maybe obsessively tested. So by the time we do launch it, we're fairly certain that it's going to do extremely well. And so these categories you just mentioned are extremely promising.

Okay. Perfect. Thanks a lot. Have a nice day.

Thank you.

Our next question comes from the line of Joe Thomas. Please state your company name and ask your question.

Good morning, Anthony and Eduardo. It's Joe Thomas here from HSBC. Just digging into that last question a little bit more, could you talk about the fresh trial specifically, please, and if there's any sort of sales uplift associated with that and what the opportunity is to extend that to retrofit existing stores for that. And then on a related topic, CapEx for the year, I'm just wondering if you could give some sort of update around that and how you expect it to be phased over the quarters. Thank you.

It's worth just stepping back and saying that at any point in time there's about 60 different products slash new lines being tested in our stores in parallel and Some of them make the final cut, and then you see them deployed across the companies. In the case of fruits and vegetables in particular, the results are promising, as the test has been running and been fine-tuned and re-fine-tuned, and we remain quite optimistic that it's a worthwhile category to have. In those test stores, yes, you know, it's no surprise that when you add fruits and vegetables, you do see an uplift in tickets. It's normal. And so we remain quite excited about this category. In terms of use, second question was CapEx. I'm going to let Eduardo answer.

Hi, Joe. CapEx, we're just closing our 20th. It's about 5.2 billion pesos. which that includes the number of stores that we guided, also includes additional distribution centers, and, of course, all the equipment around that, including trucks and cars, et cetera. So we are today quite comfortable with that number and executing on that for the balance of the year. Thanks a lot. Thank you.

Our next question comes from the line of Alberto Rodriguez. Please state your company name and ask your question. Please unmute yourself to ask your question.

No question here. Thank you.

We have a follow-up question from Hector Maya. Please ask your question.

Hi again. Hi again, Hector Maya, Scotiabank. Thank you again for the chance of another question. I recall that the penetration of private label last quarter was 58% of sales. But could you give us an update on what the level was this quarter? And also, is there a threshold at which the business starts structurally changing from what we have now with higher penetration, or would you say that everything remains the same if you operate at 60% of private label compared to 70% or 80% penetration? I mean, more than at the margin level, how would things change with suppliers, their scale, their relevance, and how do you think about development of new SKUs and how you arrange them at the store with a higher penetration? Thank you.

No, we don't. We update this number once a year, but you can imagine that the trend continues upwards. In terms of, you know, do I see a change of how we operate with more private label? The answer is no, not really. And here I will tell you, just take a look at BIM, who's been in this market way longer than we have. It's a little bit like a time machine that gives you a fairly good answer as to, you know, what things might look like a few years down the road. But immediately for us, there is absolutely no change if you go from 50 to 60 to 70. No structural change. In terms of, you know, part of your question was how do things change with suppliers. I would answer that by saying things change naturally as you get bigger. I mean, suddenly you're selling 30% more, you're buying 30% more. Everybody has to march in lockstep to sustain that growth. And that has not stopped for the last 10 years, it's been the case. So it will continue to be so in terms of planning ahead of time and projecting growth and projecting, you know, procurement needs, et cetera, et cetera. As you know, we plan way ahead of time. And that has allowed us to sustain, you know, these growth rates above 30% now for over 12 years without any hiccups. And to be able to do that, you need to be very disciplined in terms of execution and in terms of planning. And I expect that to continue.

Excellent. Muchas gracias, Anthony. Eduardo, thank you very much.

Our next question comes from the line of Guli Arshad. Please state your company name and ask your question. Please unmute yourself to ask your question.

Hi. Can you hear me now?

Yes, Guli. Please go ahead.

Yes. So, Anthony, congratulations on your usual strong results. I know that a strong IT department is one of the pillars of the BBB growth story. So, how are you incorporating AI mentality and processes inside the company? Or is it relevant?

Yes, absolutely. Great to hear from you Gulit to start with. There was a question earlier on about SG&E and expenses and I made a comment about our investment in talent and a big chunk of that investment in talent is actually in IT. With the firm belief that a lot of our future growth is driven by executing across the board an IT strategy. You know, sometimes I joke internally that we're an IT company selling groceries. So, yes, there is a very strong component of artificial intelligence that's starting to take root in the company, very similar to what's happening in many companies. And you can see already the effects in terms of improved efficiency and gains of time across the board. And I think this tendency will continue and get stronger, especially as, you know, companies providing these tools start providing better and better tools. And the speed at which we've seen improvements in these tools is absolutely staggering. So expect that, you know, this becomes part of normal life in 3B.

Very good. Thank you.

Our next question comes from the line of Federico Galassi. Please state your company name and ask your question.

Hi, guys. Rodrigo Galassi, Reflecting Group. One question from my side is, in the last year and a half, the corporate business, if you want for more information to the ADR, the new consular, et cetera, was one of the teams that dragged the margins. we're taking out the operational side. Do you believe that you have the structure necessary to grow in the next eight years? Thank you.

Sorry, Federico. Let me see if I understood your question. You're asking that, you know, do you think we have built the right structure centrally to sustain our growth rates going forward? Would that be your question?

Absolutely. Beyond the operational side. Not that we continue to grow the new stores.

And Again, this belief and philosophy that we have of planning ahead of time, which has served us extremely well and explains how we can sustain such rapid growth rates over time and not have any hiccups, applies to everything. And it applies to thinking about what the corporate structure essentially should be and what kind of talent needs you need and how many people you need and which areas so that you can execute on your plans and across the board, how do you raise the level of performance of the team in general? And that's been all planned for, and not today. So we're executing on it, and I think we're in very good shape to sustain future growth. And I come back to this very strong belief we have that, you know, it's the team that makes the difference, right? Everybody knows how to sell groceries, and it's all a question of how well do you execute and how fast you execute.

Perfect.

Thank you so much, Anthony. We have run out of time for further questions. I would now like to hand the call back over to Anthony Hatoum for his closing remarks.

Well, thank you, everybody, for participating. And joining us today, I'd like to thank all our investors, current and future, for believing in us. And I'd like to thank all the analysts who have joined us today for their continued coverage and their excellent questions. Thank you again, and we look forward to talking to you in the next earnings call.

Thank you. You may now disconnect.