Alsea S.A.B. de C.V

Good morning, everyone, and thank you for joining us for quarter and full year 2025 Earnings Video Conference. Today, you will hear from Christian Gurria, our chief financial officer, and Federico Rodriguez, our chief financial officer. Christian will walk us through our operating performance and strategic progress, while Federico will provide a detailed review of our financial results and capital allocation. Before we begin, I would like to remind you that some of our comments today contain forward-looking statements, based on our current expectations. Actual results may differ materially. Today's discussion should be considered alongside the disclaimers included in our earnings release and our most recent filings with the Bolsa Mexicana de Valores. The company undertakes no obligation to update these statements. Unless otherwise specified, all figures discussed today are presented on a pre-IFRS 16 basis. With that, I will now turn the call over to Cristian for his opening remarks.

Gracias, Gerardo. And thank you, everyone, and good morning, and thank you very much for joining us today. I will begin with an overview of our performance for the fourth quarter and full year 2025, highlighting key operating trends across regions and brands. as well as our progress in digital transformation expansion and ESG initiatives. Federico will then walk you through the financial results in more detail. Before going into the quarterly figures, I would like to briefly step back and reflect on how our strategic priorities throughout 2025 are shaping our business today. Despite a challenging start of the year, we responded with targeted operational and portfolio initiatives that led to a gradual improvement in performance as the year progressed. Throughout 2025, we focused on strengthening traffic and innovation to keep our brands remaining relevant and top of mind for our consumers. At the same time, we adopted a more selective and disciplined approach to growth, directing capital towards formats and initiatives with consistently strong returns. This included strengthening our portfolio through the incorporation of brands such as Chipotle and Raising Cane's into the Alsea family, fully aligned with our long-term objectives. The right brands in the right geographies and the right stores, prioritizing quality over quantity. In parallel, we simplify our portfolio through the divestment of non-core assets in South America and Europe. This is part of our core strategy going forward as we will continue with this simplification as we are aiming to have a healthier and more profitable portfolio. The aforementioned is enabling us to concentrate resources on markets and brands with a stronger growth potential. translating into meaningful improvements in efficiency and profitability. Finally, we sharpen our approach to capital allocation and cash generation, optimizing capex and reinforcing our financial structure. With that context, let me now turn to our four-quarter performance. In the four-quarter, total sales increased by 0.5% year-over-year, reaching 21.7 billion pesos, or 12%, excluding foreign exchange effects. Same-store sales grew 3.3% during the quarter, reflecting improving trends across several markets. EBITDA increased 2.9% year-over-year to 3.7 billion pesos, with a margin of 16.8%, representing a 40 basis point expansion versus last year. Same store sales grew 3.3% during the quarter, reflecting improving trends across several markets. The results reflected disciplined execution, improving operating leverage, and the benefits of portfolio optimization efforts. Turning on brand performance, at Starbucks Alcea, same store sales increased 2.9% in the quarter. In Mexico, same store sales grew 2.6%, with prior quarters and reflecting stable demand and consistent performance. In Europe, same-store sales declined 0.3%, primarily due to continued pressure in France, partially upset by solid performance in Spain. In South America, same-store sales increased 8.8%, driven by Argentina. Excluding Argentina, same-store sales grew 1.1%, supported by strength in Colombia and gradual recovery in Chile. Domino's Pizza Alsea delivered a 5.2% increase in same-store sales. In Mexico, same-store sales grew 6.3%, supported by innovation, such as croissant pizza, driving value and innovation. Also, we launched and expanded delivery capabilities through a strategic aggregator in Mexico. In Spain, same-store sales increased 3.3% reflecting effective promotional execution. And in Colombia, same-store sales rose 9.6%, demonstrating strong and consistent performance through the year. At Burger King, same-store sales excluding Argentina declined 3.9%. In Mexico, same-store sales decreased 4.8%, reflecting continued pressure on the brand despite gradual operational improvements during the year. The full-service restaurant segment delivered same-store sales growth of 3% in the quarter. In Mexico, same-store sales increased by 3.8%, supported by value propositions such as Menú del Día, Tres Para Mí in Chilis, and Paradiso Italiano in Italianes. In Spain, same-store sales grew 1.9% alongside the continued portfolio optimization, including the sale of TGI Fries. In South America, same-store sales increased 2.8%, alongside the sale of Chili's and P.F. Chang's restaurants in Chile. Our expansion strategy continues to be guided by a clear focus on quality, returns, and capital efficiency. During the fourth quarter, we opened 55 new stores, bringing total openings in 2025 to 169 units, 127 of them being corporate and 42 franchises below our initial expectations this reflects a delivery shift toward fewer higher quality investments prioritizing locations and formats with the stronger return profiles remodeling and the renovation of our existing portfolio remain as a key priority across regions as store refreshes continue to deliver attractive returns through improved customer experience, higher productivity, and faster payback periods. Overall, our expansion approach in 2025 reflects disciplined capital allocation and a clear focus on long-term value creation. Our digital platforms remain a key growth driver for Alsea. By the end of the quarter, loyalty sales increased 13.4% to 8.2 billion pesos, representing 30.6% of total sales and 36.6 million orders. We surpassed 8.2 million loyalty active customers and users across our brands, confirming the strength of our digital engagement. In addition, during the quarter, Domino's implemented full service through an agreement with a known aggregator. This initiative significantly expanded delivery coverage by more than doubling the number of available drivers per store, improving service levels during peak hours without incremental costs. During the quarter, we continue advancing on our ESG agenda as a core pillar of our long-term strategy. fully aligned with capital allocation and risk management. In Europe, we completed our first round of sustainable financing for 273 million euros, linked to targets for emission reductions, strengthening supplier assessment based on ESG criteria, and improving food waste management. This progress enabled a second ESG-linked financing tranche up to 550 million euros through 2029. Additionally, in Mexico, we further align our strategy by securing a sustainability link loan of 10.5 billion pesos tied to KPIs focused on emissions intensity and waste reduction. In Mexico, during the months of October and November, Fundación Arcea, through Va Por Mi Cuenta movement, raised more than 50 million pesos as part of its annual fundraising initiative. These efforts were reflected in our continued inclusion in the Dow Jones Sustainability Index in 2025, scoring 18 percentage points above the global sector average and ranking within the top 10% of the industry. For Arcea, ESG is embedded in how we allocate capital, manage risk, and create long-term value. With that, I will now turn the call to Federico to review our financial performance. Thank you.

Thank you, Christian. Good morning, everyone. In the fourth quarter, sales increased 0.5% year over year, supported by a sustained consumer preference for our brands and effective commercial strategies. Excluding foreign exchange effects, sales increased 12%. In Mexico, the sales increased 7.9% to 12.5 billion pesos. In Europe, sales declined 1.2% in peso terms while increasing 5% in euros and in South America, the sales declined largely due to currency effects. The EBITDA increased 2.9% year-over-year with a 40 basis points margin expansion driven by stable food costs, disciplined execution, and improved labor efficiencies. In Mexico, the adjusted EBITDA increased 17.1% year-over-year, primarily due to an increase in same-store sales of 3.1% following a strong recovery in November and December, while the portfolio optimization and improved labor efficiencies helped offset higher wage costs. In Europe, adjusted EBITDA was 18.7%, higher year-over-year, driven by a 1.7% increase in same-store sales, lower food costs, and disciplined labor cost management. In South America, the adjusted EBITDA declined by 22.9%, largely due to the depreciation of the Argentine peso relative to the Mexican peso. This impact was partially mitigated by robust consumer demand in Colombia and stable market conditions in Chile, although Argentina continued to experience a more challenging operating environment. The net income for the quarter increased 32% year-over-year to 812 million pesos. reflecting a continued, though less pronounced, positive non-cash foreign exchange effect related to U.S. dollar denominated debt. As we have mentioned, previous quarters, this impact is non-recurring. Following the refinancing of the obligations, we have now achieved a natural hedge and this revaluation will no longer affect the P&L going forward. CAPEX for the full year totaled 5.1 billion pesos. Of this amount, 75% was allocated to store development, including the opening of 127 new corporate units, remodelings and equipment replacement, while 25% was directed to strategic projects, including the Guadalajara Distribution Center, technology upgrades and process improvements. As of December 31, 2025, the pre-IFRS 16 gross debt increased by 0.9 billion pesos year over year, reaching 34 billion pesos. The company's net debt, not counting the impact of IFRS 16, was 28.3 billion pesos, which is 1.7 billion more than it was at the same time last year. The bank loans are allocated towards selling the minority stake in the European operations, as well as addressing short-term debt requirements for working capital and capital expenditure needs. Consolidated net debt reached 45.2 billion pesos, including lease liabilities. At the end of the quarter, 58% of the debt was long-term, with 77% denominated in Mexican pesos and 22% in euros. We remain focused on maintaining a healthy capital structure supported by prudent financial management. At the end of the quarter, the cash position stood at 5.7 billion pesos. Turning to financial ratios, the total debt to post-IFRS 16 EBITDA ratio closed the quarter at 2.8 times, and the net debt to EBITDA ratio stood at 2.5 times. Our fully year results were broadly in line with the guidance we provided and subsequently updated during 2025. Same-store sales, revenue growth, EBITDA, and leverage all finished within expected ranges. We will provide more detail regarding the guidance for 2026 during ALSEA Day on March 18 in New York City. This will be a great opportunity to invite everyone to our event and connect with you. With that, we will now open the call for questions. Please, operator.