Alsea S.A.B. de C.V

Good morning, everyone, and welcome to Alsea's fourth quarter and full year 2023 earnings video conference. My name is Gerardo Lozoya, head of investor relations and corporate affairs. And today, our chief executive officer, Armando Torrado, and our chief financial officer, Rafael Contreras, will be presenting our results. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements. S.A.B. de C.V It's important to note that earnings numbers referred to are based on pre-IFRS 16 standards unless specified otherwise. I would now like to hand it over to Armando for his initial remarks. Please go ahead, Armando.

Thank you, Gerardo, and good morning, everyone. In this conference, I will be sharing insights into our financial results, regional dynamics, grant performance, and highlights from this year. I would first like to take the opportunity to recognize and thank our more than 77,000 team members and other stakeholders for the dedication to ALSEA. Your commitment has made this quarter and a year a great success. Before going into the numbers and highlights for the quarter and a full year, as you will have seen early today, Rafael Contreras is stepping down as our CFO, and this is not a goodbye for Rafa. He will remain as part of our senior management, supporting me and the board of directors in some other projects. Federico Rodriguez, here to my left, will be stepping down into the global CFO role after his many years as a CFO of Alsea Europe. I wish them both the best on this new role. Now on slide number four, we concluded the year achieving strong results. In the fourth quarter of 2023, we reported a 7.8 year over year increase in total sales, reaching a 19.9 billion pesos or a 13.8 increase when excluding foreign exchange effects. Same store sales, grew by 12.1 year-over-year, reflecting a continued favorable consumer trend during this year, this excluding Argentina, same stock set that grew only 8.9. EBITDA grew by 25.8, totaling a 3.1 billion pesos for the quarter, with a 16% of margin. We served over 13 million delivery orders in the quarter, amounting to 3.5 billion pesos, which accounted for 17.7 of our total sales. Turning to the slide number five, overall, we delivered strong results across all the company regions this year. It's clear that our commercial, digital, and operational strategies, along with favorable consumer demands for our brands, have a positive a positive impact. For the full year, we reported an increase in total sales of 10.7%, reaching more than 74 billion pesos, a 7.2 billion pesos increase in comparison of 2022. Same success for the full year, increased by 14.7 compared to 2022, excluding Argentina's system sales, the increase was 12.6%. EBITDA was above 10 billion pesos for the full year, up a significant 22.3 compared to 2022, resulting in an EBITDA margin of 14.2%. Post IFRS 16, EBITDA grew by still a solid 13.6 to 16 billion pesos for the year, with a margin of 20.9%. Sales through the delivery segment in 2023 were resilient, growing by a 4.2, reaching nearly 12,800 million pesos. with over 48.8 million orders. This represents a 17.1% share of S.A.B. consolidated sales. Excluding Domino's Pizza, the delivery segment grew in 2023 11.3%. Lastly, operating cash flow was healthy, 12.9 billion pesos in 2023, allowing us to deliver us alongside a continuing and expansion maintenance plans. Regarding our brands, all regions reported a solid performance. Starbucks achieved a strong year-over-year sales that grew 17% for that fourth quarter and a 23% for the full year. In the fourth quarter, the Starbucks Mexico same store increased by 21.1%, while Europe increased by 3.5%, affected by brand issues in France. In South America, we grew an 18.6%. For the full year, 2023, Starbucks same store sales in Mexico, Europe, and South America increased by 36%. 13.9 and a 23.3 respectively compared to 2022. This strong performance is mainly driving by drive-through formats, product innovation, and implementation of the loyalty programs Starbucks awards in Europe. Regarding Domino's Pizza, we posted a solid four quarter sales in Mexico with an increase of 9.8%. For the full year, sales increased by 6.5% and 4.4% in Spain. This performance was mainly driven by affordable consumer trends, commercial strategies such as Dominos Mania in Mexico, and attractive promotions at the counter in both countries and a product innovation Regarding Burger King, our full-year results were mostly positive, with sales increasing in Mexico, Spain, and Chile of 8.6%, 1.8%, and 4.3% respectively. In Mexico and South America, we continue to focus on expanding the rollout of digital kiosks, which have led to double-digit growth in our average ticket. Regarding the casual dining division, also we reported a solid fourth quarter and full year with same-store sales of up 7% and 10.5% respectively. This performance was helped by product innovation and improvement of customer experience, which contributed to an increase in our traffic and orders. Regarding our VIPs in Mexico, we reported a 7.5% growth in the same-store sales for the fourth quarter. This growth was mainly driven by 7.1 increasing orders, and for the full year, same-store sales increased by 9.8%. We remain very focused on offering a high-quality service product innovation and continue to our plan of remodeling our restaurants to further improving the storage experience for our customers. With a tough comparable year ahead of us, we expected sales growth going forward to normalize. Moving to slide number seven regarding, we have continued with organic expansion strategy. And in the fourth quarter, we opened 96 corporate units and 25 franchisees. As always, focusing on the most profitable and high-growth locations. Additionally, we remain committed to expanding the drive-thru format in Starbucks Mexico, which was increased sales by more than 30%, with approximately 200 drive-thru units in our country. Our total openings for that year amounted to 257, of which 184 were corporate units and 73 were franchisees. Our expansion strategy was in line with our guidance given during last year in our S.A.B. Regarding digital, in line with our digital transformation strategy, at the end of 4.23, our loyalty sales grew 25.1% versus last year, reaching 3.8 billion pesos. This represent a 21.3% share of the total sales. At the end of the year, our loyalty sales grew 29.1% versus last year, reaching 14 billion pesos. This represents 21% of share of the total sales. The development of the Starbucks reward programs continue to be a key factor for the sales grow in this quarter. We reached more than 1.8 million users globally, reaching almost 400,000 users in Europe since the launch of the loyalty program in the second quarter of 2023. Regarding ESG, in 2033, we took our sustainability strategy to the next level by adopting double materiality, enabling us to the target and measure of our initiatives more effectively. Alsea achieved a global milestone by concluding the year with 85 Starbucks Greener stores in Latin America, the highest number of stores in the system for a licensee. The Huerva Por Mi Cuenta campaign, an initiative supported by Fundacion Alsea, raised 45 million pesos to support daily meals for over 6,000 people in 22 child dining rooms. Our efforts have extended to helping over 2 million individuals with sustainable financial and food donations. In the wake of Hurricane Otis, Vapor Mi Cuenta, together with World Vision Mexico, donated 4.3 million pesos to support more than 24,000 people. providing significant support to the affected communities in Guerrero. I am very pleased with our fourth quarter and full year results. They underscore the success of our operational strategy and the enduring apparel of our brand amongst consumers. I look forward to another strong year in 2024 and we extended our current market leading position in our key geographies and our brands. Now, I will hand over to Rafael so he can go over our financial information in a further detail.

Thank you, Armando. We are delighted with Alsea's fourth quarter 23 performance as quarterly sales and full year increased 7.8% and 10.7% respectively. driven by positive trends in all regions. Excluding foreign exchange effects, sales increased 13.8% for the quarter and 19.7% for all regions for the full year. In Mexico, sales were up 13.9% to 10.7 billion pesos for the quarter. Sales in Europe grew by 2.7% to 6.1 billion pesos or by 9% in Euro terms. Finally, South America posted a slight 0.5% decrease in sales for the quarter to 3.1 billion pesos due to the devaluation impact in Argentina. In Mexico, adjusted EBITDA increased 12.7% to 2.4 billion pesos for the quarter. This improvement was driven by ongoing fireball consumption trends and effective cost management. Also, The 13.5% growth in same-store sales boosted operating leverage, and the appreciation of the Mexican peso helped cut costs by 160 basis points as a percentage of sales. For the full year 2023, adjusted EBITDA increased 18.9% to 9 billion pesos with margin expansion of 30 basis points. In Europe, adjusted EBITDA increased by 14.5% to 1.1 billion pesos for the quarter and 22% in euros driven by lower energy costs. For the full year, adjusted EBITDA increased by 9.3% to 3.5 billion pesos with margin expansion of 60 basis points. In South America, adjusted EBITDA increased by 7.3% to reach $568 million, driven by lower food costs. For the full year, adjusted EBITDA increased 10.4% to $2.2 billion, with margin expansion of 120 basis points. S.A.B. de C.V Product Innovation, Digital Application Development, and Improving Cost Control. For the full year 2023, earnings per share was 3.15 pesos. Post IFRS 16, earnings per share rose to 3.53 pesos and increased to 79.9% year over year. In terms of our investments, our full-year capex amounted to 4.7 billion pesos. We allocated 28% of the amount to maintenance, 54% to store openings and remodels, and 18% for other strategic projects. We made solid responsible investment through the year, focusing on profitability. Regarding our debt profile, As of December 31st, 2023, we made amortization payments of 324 million pesos. Our gross debt decreased by 1.3 billion pesos year over year, closing at 26.5 billion pesos. This reduction in debt corresponds mainly to the devaluation of the euro against the Mexican peso and debt amortization during the year. Looking to our total debt to EBITDA ratio, we closed the year at 2.45 times and our net debt to EBITDA ratio at 1.89 times. Our EBITDA to interest rate closed the year at 4.2 times. The debt structure at the end of the year was 93% long-term with 62% in Mexican pesos and 38% in euros. S.A.B. de C.V another minority partners for 23% of food service project S.A.B. that is Alsea Europe. We will finance this transaction with cash and a bank loan and the company maintains a strong balance to address deep needs and prioritize organic growth in the immediate future. This transaction reflects Alsea's commitment to the region and the growth potential for the company in the future. Now I would like to hand over to Gerardo.