Alsea S.A.B. de C.V

Good morning, everyone, and welcome to Alcea's first quarter 2026 earnings video conference. My name is Gerardo Lozoya, head of investor relations and corporate affairs. Today, you will hear from our chief executive officer, Christian Gurria, and Federico Rodriguez, our chief financial officer. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business and that future results may differ materially from these statements. Today's call should be considered in conjunction with disclaimers in our earnings release and our most recent Bolsa Mexicana de Valores report. The company is not obliged to update or revise any such forward-looking statements. Please note that unless specified otherwise, the earnings numbers referred to are based on pre-IFRS 16 standards. I will now hand it over to Christian for his initial remarks. Please go ahead, Christian.

Thank you Gerardo, Federico, good morning. Good morning and thank you all for joining us in ALCEA's Fresh Squatter 226 earnings video conference. I will begin with an overview of our performance for the Fresh Squatter, highlighting key operating trends across regions and brands, as well as our progress in digital expansion and ESG initiatives. Federico, our CFO, will then walk you through our financial results in more detail. Before going into quarterly figures, I would like to briefly step back and reflect on how we started the year. As we shared during our ASEA Day in March, our focus remains on taking care of what matters most, our people, our customers, and our resources. This means building the right portfolio, Driving traffic through innovation and best-in-class service and improving profitability. The first quarter reflects a consistent execution of this approach. Coming out of 2025, where we made deliberate decisions around portfolio focus, capital allocation, and operational discipline, our priority has been to maintain that trajectory while navigating a challenging environment. In this context, S.A.B. de C.V We maintain robust operating performance supported by the strength of our brands, our scale, and our execution. With that context, let me now turn to our first quarter performance. In the first quarter, we reported a 1.4% year-over-year increase in total sales, reaching 20.1 billion pesos, or a 5.8% increase. excluding foreign exchange effects, same-store sales grew by 4.1%. EBITDA increased 1.8% in the first quarter, reaching 2.4 billion pesos, with a margin of 11.8%, increasing by 10 basis points year over year. Regarding brand performance in the first quarter, Starbucks Alsea same-store sales increased by 3.5%, For Starbucks Mexico, same-store sales grew by 2.1%, supported by a strong start of the year and a stable demand, which was partially compensated by our high-demand commercial collaborations of peanuts in 2025 and the negative impact from our Jalisco and other state events at the end of February. For established Europe, same-store sales increased by 1.3%, with solid performance in Spain, while France remains challenged, also showing a gradual improvement. Finally, in South America, same-store sales rose 12.1%, driving primarily by Argentina. Excluding Argentina, same-store sales increased 5.5%, supported by strong performance in Colombia and an important recovery in Chile. Domino's Pizza Alsea posted a 5.3% increase in same-store sales, reflecting continued growth supported by the expansion of our delivery capabilities. In Spain, same-store sales increased by 5.1%, reflecting effective commercial execution, such as the launch of the Madrissima pizza, which is made of sourdough, extra virgin olive oil, and a slow double fermentation process. This is another example of how innovation is driving profitable traffic. In Colombia, Domino's same-store sales increased 8.7%, with continued strong momentum with a better-than-expected Domino's Mania value campaign. Burger King's same-store sales, excluding Argentina, increased by 0.7%. In Mexico, Burger King reported an increase in same-store sales of 3.0%, showing early signs of recovery. In Chile, same-store sales decreased 2.3%, reflecting softer trends during the quarter. The full-service restaurant segment delivered 4.3% same-store sales growth, remaining one of the most consistent performers during the quarter. Full-service restaurants in Mexico increased by 4.9%, supported by higher order volumes and a strong value proposition across brands. I want to highlight Vips Performance, who grew 7.2% driven by traffic generation from a consistent execution of our value platform, Menú del Día. Same-store sales for full-service restaurants in Spain grew 3.5%, reflecting solid performance across most brands, with Foster's Hollywood standing out, posting same-store sales growth of 7.5%. Our expansion strategy continues to be guided by clear focus on quality, returns, and capital efficiency. During the first quarter, we opened 32 new stores, 20 corporate units, and 12 franchises. As in previous quarters, we remain focused on prioritizing high-return locations and formats while maintaining a disciplined approach to capital allocation. As we highlighted in our most recent S.A.B. day, remodeling continues to be a key priority across regions as store remodeling delivers attractive returns to improve customer experience, higher productivity, and faster payback periods. In addition, as previously announced, we are moving forward with our plans to introduce our new brands, Chipotle and Racing Games, with the first store openings expected in the second half of 2026. Our digital platforms continue to be key drivers of growth. By the end of the quarter, loyalty sales increased 12%, reaching 5.5 billion pesos, representing 26.4 million orders, and contributing to 28.8% of total sales. By the end of the quarter, loyalty sales increased 12%, reaching 5.5 billion pesos, representing 26.4 million orders and contributing 28.8% of total sales. We also surpassed 84 million active customers, which are around 200,000 more, versus the fourth quarter across our loyalty programs, confirming the strength of our digital engagement and our loyalty base. Additionally, we served nearly 35.7 million digital orders in the quarter, representing 7.8 billion pesos, which accounts for 41.2% of our total sales. During the quarter, we continued advancing our ESG agenda as a core pillar of our long-term strategy. Fundación Alcea achieved a record fundraising campaign through Movimiento Va Por Mi Cuenta, raising more than 62 million pesos and surpassing the previous year. These resources will support more than 14 million people in vulnerable communities during 2026. Through programs focused on food security and in collaboration with multiple partners organizations. Across our operations, we continue to strengthen our environmental and social impact in Europe. Domino's advancing its transition towards a low-emission delivery fleet, while we continue our food donation programs contributing to waste reductions and community support. In South America, we supported communities affected by wildfires in Chile through food donations and fundraising initiatives while our teams across the region continue contributing in local volunteering programs. These efforts continue to reinforce ESG as an integral part of how we operate. Let me now turn it over to Federico, our CFO, who will provide further insight into our financial performance. Thank you.

Thank you, Chris, and thank you. And good morning, everyone. The sales increased by 1.4% in the first quarter, supported by effective commercial strategies and solid performance in Mexico, Spain, and Colombia. Excluding foreign exchange effects, the sales increased 5.8%. During the quarter, disruptions in Jalisco and surrounding states resulted in a negative one-off impact of approximately 60 million pesos in revenues. In the first quarter, sales in Mexico were up 4.9% to 11.2 billion pesos. In Europe, sales increased by 1.5% to 6 billion pesos, while in Europe sales increased by 6.3%. Finally, South America sales fell 10.7% to 2.9 billion pesos, mainly due to currency effects. During the quarter, the gross margin was adversely affected by segment and geographic mix, as higher-cost businesses represented a larger share of sales, while Europe contributes less to consolidated cost of food. Furthermore, as expected, the kickoff of the operations of the Guadalajara Manufacturing and Distribution Center is on a stabilization stage. These impacts were partly offset by favorable foreign exchange effects. Evida increased by 1.8% with a margin expansion of 10 basis points, mainly due to discipline, execution, and operating efficiencies across regions. By region, in Mexico, the adjusted Evida increased 5.8%, with margin expansion of 20 basis points supported by favorable cost dynamics, partially offset by higher labor expenses. In Europe, The EBITDA increased by 4.2% year-over-year with a margin expansion of 30 basis points, primarily due to same-store sales growth and operating leverage. In South America, the adjusted EBITDA decreased by 14.3% with a margin contraction of 50 basis points, primarily impacted by currency effects and some pressure on labor costs. The same as in the revenue line during the quarter, disruptions in Jalisco and surrounding states resulted in a negative one of impact of approximately 25 million pesos. It took from three to six weeks to recover the lost traffic. The net income for the first quarter decreased by 65.7% year-over-year, reaching 115 million pesos, reflecting the one-off impact from the early settlement of the debt refinancing, including derivative instruments related to the U.S. dollar bond of approximately 250 million pesos. Additionally, in 2025, we had a positive non-cash FX gain driven by the strong Mexican peso. First quarter free cash flow improved year over year, mainly reflecting improved working capital management. The capex for the three months of the year total 876 million pesos. Out of this total, 81% was allocated to store development initiatives, including the opening of 20 new corporate units, the renovation and remodeling of existing locations, and equipment replacements across the branch. The remaining 20% was directed at strategic projects primarily focused on technology, process improvements, and software investments. By the end of the first quarter, the pre-IFRS 16 gross debt increased by 666 million pesos year-over-year, reaching 35 billion pesos. The company's net debt, not accounting the impact of IFRS 16, was 29.7 billion pesos, which is 507 billion less than it was at the same time last year. This increase in gross debt reflects funding requirements related to CAPEX and working capital during the quarter. Consolidated net debt reached 46.4 billion pesos, including lease liabilities. S.A.B. de C.V. Turning to the financial ratios, the total debt to postage for a 16 EBITDA ratio closed the quarter at 2.9 times, while the net debt to EBITDA ratio stood at 2.5 times. I will now pass you over to the operator for the Q&A session. Please, operator.