Alsea S.A.B. de C.V

Good morning, everyone, and welcome to Alcea's third quarter 2023 earnings video conference. My name is Nicolás Espinoza from Alcea's IR team, and today our chief executive officer, Armando Torral, and our chief financial officer, Rafael Contreras, will be presenting the quarter results. Now, I would like to hand it over to Armando for his initial remarks. Please, Armando, go ahead.

Gracias. Thank you, Nicolás. Good morning. Good morning, everyone, and thank you for joining our third quarter 2023 earnings video conference. I'm pleased to present Salsea's latest financial results, provide insights into regional and brand performance, and discuss the main highlights for the quarter. Overall, we deliver strong sales performance across all the companies' brands this quarter, and it's clear that our commercial strategies, product innovations, and our digital strategy has, again, solid results. when excluding the impact of peso appreciation. Same-store sales also saw a substantial 17.3 year-over-year increase, reflecting continued customary loyalty across all regions and brands. EBITDA by IFRS grew by an impressive 24.6%. Totally 2.6 billion pesos for the quarter, with a 14% margin, way above our guidance. Post-IFRS, EBITDA grew by a still strong 30% to 3.5 billion pesos for the quarter, with a margin of 20.2%. We serve over 12.1 million orders by home delivery in the quarter, amounting at 3 billion pesos sales. Home delivery sales accounted now for 16.1 of our total sales. Regarding our brands, Starbucks reported an impressive year-over-year same-store sales growth of 24.9%. In Mexico, same-store sales increased 26.5% year-over-year. Europe, a 13.1%, and South America reached a 35.7%, and excluding Argentina, 6.8%. Domino's Pizza posted a solid sales in Mexico and Spain with an increase of 8.1% and 3%, respectively. We are pleased to see that our range of commercial strategies and effective contribute to boost our total sales in the pizza sector. Regarding Burger King, in Mexico, we had another overall successful quarter with sales increase of 9.6%. We are focused here on expanding the national rollout of our digital kiosks, which have proven to increase the average ticket by a double digit number. Our global restaurant business, excluding VIPS Mexico, also reported a solid quarter with same-store sales of 8.8%. Regarding VIPS Mexico, it continues with a strong same-store sales performance, reporting an 11.3 year-over-year increase with guests of 9.5%. Regarding BIPS, it's been improving in store experience and product diversifying. We remain very focused on the product and experience with our customers. We started the first overall celebration with a remarkable, that will be a remarkable year. Next year, we'll have 60 years in Mexico. We'll celebrate our 60 years in Mexico, and we will have several events to celebrate with guests and our Bipster members along this year. In Vips Mexico, we increased the brand probability based on remodeled stores. During this year, we are remodeling 30 units, reaching 177 stores remodeled of a total of 238. With this improvement, we have increased average weekly unit sales in 15% compared to the same store sales before remodeling. S.A.B. de C.V S.A.B. focuses on the most profitable ones and the high growth opportunities. Additionally, we have placed special emphasis on the drive-through format in Starbucks Mexico with a total of 185 drive-through units in the country, which has shown a 30% increase in sales comparing to the standard format. In line with our digital transformation strategy, Our loyalty sales grew 28.7% versus last year, reaching a 3.5 billion pesos at the end of 3Q of 23. This represents 19% of share of the total sales. Regarding Starbucks, your program starts for everyone. That was launched in Spain, France, and Portugal. In last quarter, we had more than 280,000 new members. that join our programs. That it's also happened with a 10% in tender in average. In the Starbucks Mexico rewards tender, the Starbucks Mexico rewards tender has 28% now, and we expected to grow the tender also in Europe in these levels. Regarding ESG during the third quarter of 2023, We continue to sponsor significant environment and social initiatives in the line with objectives of our ESG model. In our fight against food waste, we expanded our partnership by placing new brands on that Too Good To Go app in ASEA Europe. This app allow us to maximize product sales during the final hours of stores operations to prevent waste. Through this partnership, we have sold over 66,000 food packages this year while avoiding 174 tons of CO2 emissions. In a collaborative effort with the Planet Water Foundation, Alsea South America has provided clean and safe drinking water to the community of Caquesa in Bogota, Colombia. S.A.B. de C.V. In line with our commitment to inclusion and accessibility, we have begun the countrywide introduction of Braille menus for the blind and visually impaired for all the Mexican brands. We anticipate that the completion initiative will be ready in early 2024. I am very pleased with our year-to-date results. S.A.B. Our team with more than 76,000 team members across 12 countries providing their excellence day in and day out. Now, I will hand over to Rafael so we can give you more details, overview of our brands, regions, results, and a balance sheet item. Thank you very much.

Thank you, Armando. Good morning, everyone. As Armando mentioned, all the Alsea team members are pleased with Alsea's performance as quarterly sales increased 8.8% on a pre-FRS basis year over year, driven by a positive trend in all regions. Costs were down 20 basis points versus last year, and EBITDA pre-FRS was up 24.6% to 2.6 billion pesos. in Mexico sales were up 17.8% to 9.9 billion pesos and adjusted EBITDA was up 20.7% per IFRS to 2.2 billion pesos this improvement was driven by robust consumption trends and effective expenses management also S.A.B. de C.V In Europe, sales increased by 3.7% to 5.6 billion pesos, or by 14.1% in euro terms. At Jotset, EBITDA increased by 46.8% per IFRS to 884 million pesos, and in euros by 62.3%. S.A.B. de C.V S.A.B. S.A.B. Pre-IFRS for the third quarter increased 60.5% to 540 million pesos year-over-year, driven by the increase in sales and EBITDA. In the third quarter of the year, we posted a pre-IFRS earnings per share of 2.8 pesos, including IFRS earnings per share rose to 2.5 pesos with an increase of 31.4% year-over-year. In terms of our investments, the total capex year to date amounted to 3 billion pesos. We allocate 30% of this amount to maintenance and 50% to store openings and remodeling and the rest of the 20% for IT and other strategic projects. In the last 12 months, we made amortization payments of 1,026 million pesos. Our prior first gross debt decreased 1.3 billion pesos year over year, closing at 26.5 billion pesos at the end of the quarter. This reduction in debt corresponds mainly to the devaluation of the euro against the Mexican peso and debt amortization during the period. During this quarter, we refinanced the Euro banking loans of 229 million euros ending in 2026 with a favorable condition of extending for two more years the amortizations of the credit after the Euro bond refinance. Our pre-IFRS 16 gross debt to EBITDA ratio at the end of the quarter was 2.6 times and EBITDA to interest paid at 3.6 times. The debt structure at the end of the quarter was 92% long-term, with 64% in Mexican pesos and 36% in euros. So we can go now to the Q&A session. Thank you.