Alsea S.A.B. de C.V

Good morning, everyone, and welcome to Alsea's second quarter earnings video conference. Today, we will have presentations from our chief executive officer, Armando Torrado, our chief financial officer, Rafael Contreras, and who will give you an overview of Alsea's second quarter results. Before starting our presentations, I would like to hand over now to our chairman, Alberto Torrado, for some initial remarks. Please, Alberto.

Thank you, Salvador. And good morning, everyone. And thank you for joining us. I would like to briefly comment about our recent changes in management that I'm sure you are all well aware of. Starting on July 11, the Board of Directors has decided to appoint Armando Torrado as CEO of Alsea. Armando is an expert regarding every aspect of the business since our origins. He has more than 30 years of experience with this company since operating the first Domino's pizza stores back in 1991. He was responsible for Domino's corporate stores for more than 10 years and later served as CEO of the brand for five years, complementing his operational experience by later being appointed as the first director in charge of the whole casual dining segment of Alsea. As a founding partner of Alsea, he played a very important role in the last acquisitions made and the incorporation of new brands to our portfolio. Likewise, he was in charge of the real estate development department and assumed the role of expansion director for Mexico and Latin America. Subsequently, Armando took the position of director of Alsea South America to later occupy the post-recision assignment as CEO of Alsea International, adding three years of experience in positions that have allowed our company to position itself in international markets. The vote of confidence from the board Today is further than chance by asking Armando to occupy a position of influence at a top leadership with our organization. From now on, Armando will be in charge of giving continuity to our plans and long-term strategy, but also boosting our results in the short term. He perfectly knows the inside of Alsea. He knows his management team in every geography and in every brand. And even more important, our people know and trust him very much. Now, I will pass over Armando for his first Quasterly presentation as a CEO. Thank you very much.

Good morning, everyone. Thanks once again, one more time, to joining Alsea Second Quarter 2022 Earnings and Video Conference. I am excited to discuss you with this quarter's strong results, our regional and brand performance and developments on our strategy going forward. And then Rafael will take you through the company's financials. First, I would like to thank the board of directors from the confidence they placed me in this appointment as new CEO. In this role, I'm building on my 30 years of experience of working in senior's position at Alsea. I will be totally focused on generating value for all of our stakeholders, from our shareholders to bond investors, but as well to our collaborators, to our communities, and of course, to our clients' customers, always staying focused on our operations and customer needs. And now looking at our results, we are pleased to report a six straight quarters of continuous sales growth. And once again, a positive EBITDA across all regions. Our strategic of investing in our key brands and strengthening in our digital channels are proving customers top quality service. And our store has once again paid off. In the second quarter, net sales increased 35.8% to 16.9 billion pesos year over year. EBITDA was 3.6 billion pesos post IFRS 16 for the quarter. That's up 27.4%. This leads to EBITDA margins of 21.4% for the second quarter. Meanwhile, same-store sales posted at an increase of 38.7% compared to the second quarter of 2021. Our key brands continue to gain market share thanks to their superior product offering and customer experience. Operating cash generation in the quarry was a healthy position of 5 billion pesos, enabling us to continue the leveraging. Compared to the second quarter of last year, we have 132 more restaurants operating across all regions. Our main focus is to increase the number of our key brand restaurants in our most profitable markets. We ended the quarter with more than 4,300 stores and more than 33,000 collaborators. As I mentioned before, sales increased 36% over a year, and we continue to see a better performance compared to pre-pandemic levels, which had a 6.2% growth versus 2Q of 2019. That is excluding FXFX. That also sales increased 45% versus 2Q of 21%. Also, our business model and actions that we've been taking over the past couple of years have proven to be effective. And now, we find ourselves in a privileged position to take advantage of our new market opportunities. Delivery continues to have a strong performance, accounting for 18.5% of our sales, with 11.6 million orders. That's for the second quarter. The digital channel is a fundamental pillar for our long-term growth strategy, and I'm pleased to announce that WoW Plus reached a million active users milestone in this quarter. Globally, we now have more than 6 million active users between all our digital platforms. EBITDA on a pre-IFRS basis grew a 44.7% for the quarter and an impressive 83.4% for the first half of 2022. That is compared to the period of 2021. Our costs increase 100 basis points as a percentage of sales year over year, reflecting the impact of our cost control strategies, I mean the inflationary pressures across several of our regions. That cost represents 32.1% of our sales. We are implementing very carefully a designing pricing strategy and overstocking strategy to mitigate the effects of the inflation without affecting the demand. Looking at our geographies, Mexico sales increased by 29% year over year. And an adjusted EBITDA increased by 449 million pesos to 0.5 billion pesos. Sales in Europe grew by 27% with adjusted EBITDA of 131 million pesos that is higher, 1.5 billion pesos. and South America poses a very strong 83% increase in sales, while adjusted EBITDA growth 335 million pesos to 679 million pesos. The contraction on an adjusted EBITDA margins in all regions are impact by the no recurring benefits that we had from the previous years. That is related to government supports program and then agreements with labor unions. as well as some discounts negotiated rents with our tenants. It is worth to mention that on a pre-IFRS basis, the adjusted EBITDA margins of Alsea Europe reported a 30 basis expansion instead of 100 basis contractions report with the IFRS 16. same as the higher expansion of 370 basis points representing the South America operation versus the 160 basis expansion report from IFRS 16. Regarding our core brands, same store sales for Starbucks, Domino's and Burger King grow in our key markets year over year. Starbucks in Chile, Spain, France and Mexico also had an outstanding results with respect increase in same sub sales of 75%, 52%, 42% and 35% respectively. Domino's Pizza both in Mexico and Spain had a 15% comparable store sales growth versus two quarter of 2021. and Burger King had increased in Chile, Spain and Mexico over 40%, 23% and 90% respectively. As you know, the this Mexico turnaround strategy is underway and we are happy with the same stock results posted by the brand during the quarter. We done a 34% increase compared to the second quarter of 2021. Also, VIPS Spain has been overperforming with a 42% growth in same-store sale and 9% above 2Q19 figures. As a result of our continued work on ISG towards achieving our 2030 goals announced last March, I'd like to share that even though some geographies are just beginning to scope and define their baseline to set their own action plans toward our goals, other countries are improving their KPIs and setting that internal benchmark and best practices. In June, we received a certification on the first green store in Latin America for our Starbucks unit located in Paseo Los Dominicos in Santiago de Chile. This store was designed to use 50% less water and produce 20% less carbon emissions. Regarding our actions to minimize food waste and contribute to ending hunger, as of today, Mexico, We have donated more than 34 tons of food that have benefited from more than 125,000 people in food poverty. In addition to those 374,000 meals, we served through the Va Por Mi Cuenta movement. During the first semester, the 12 corporate openings of Domino's Pizza, Gino's, and Big Brands in Spain have been part of the openings with costs. that we have actively donated to different NGOs. 100% of the sales achieved on the opening day of these stores, generating a very positive impact on around 14,000 beneficiaries. I also would like to highlight that to this date, we're managing to achieve a reduction of a 12% electricity usage in Mexico. And in our European operation, we certify 90% of our suppliers, which ACCP and 74% of the suppliers are GFSI certified. Today, 21% of our top-level positions are led by women. We still have a long way to go, but we are committed to being an example of sustainability in this industry. In terms of key management changes, I would like to thank outgoing Alsea's Europe CEO, Miguel Ibarrola, who is retiring from more than 20 years of service at Alsea and Grupo Sena. We wish him the best in his newest endeavors. From now on, Jose Luis Portela, who served as a Starbucks Mexico CEO, will replace Miguel, and Francisco Toso, former ALSAC Colombia Country Manager, will now serve as CEO of Starbucks Mexico. I would like now to hand a call over Rafael to give you a more detailed overview of our financial results. Rafael, please thank you and go ahead.